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2009 AM
OREPACIFIC Sustainability Report
2009 AMOREPACIFIC Sustainability Report
Creatinga Beautiful Lif
e
February September December
19th among KOREA's Most Admired Companies (KMA)
Listed on DJSI Asia-Pacific (SAM) Social Leadership Award at 2009 Global CSR Awards (EIRIS/HERI)
Excellence Prize at Health Industry Technology Awards (Ministry for Health, Welfare & Family Affairs)
Prime Minister's Prize at 2009 Korea Technology Awards (Ministry of Knowledge Economy)
Employees
Environment
Business Partners
Customers R&D Investment
KRW 56.2 billion
4.7%
Greenhouse Gas Emission
23,951ton
Basic Unit 13.6%
Employment Engagement
82%
1.0%p
Waste Generation
4,206ton
Basic Unit 19.8%
Water Consumption
248,365ton
Basic Unit 7.3%
Counsellors
35,445
Percentage of Women in Workforce
62.1%
2.6%p
Training Hours per Employee
89.7hours
37.6%
9.4%
GHG Emission Volumes at Suppliers
69,547ton
Arielles Certified as Counseling Master
143
Community Hope Store Startup Fund
16Stores
23.1%
Beneficiaries of Pink Ribbon Campaign
5,020
22.8%
Social Contribution Expenditures
KRW 13.4 billion
108.6%
Customer Complaint Resolution
99.2%
1.2%p
New Sustainable Products Launched
35products
337.5%
Note: The percentage (%) represents growth year on year.
Major Results from Sustainability Management Efforts in 2009
Prizes & Awards
1. Purpose
This, the second annual AMOREPACIFIC Sustainability Report, was issued to provide all
stakeholders with a better understanding of what we are doing to protect the environment
and improve the quality of people's lives. This Report also provides an opportunity for us
to obtain your feedback and reflect it in our way of doing business. As such we aim to grow
AMOREPACIFIC as a company that contributes to the ongoing development of society. In the
interest of open and constant communication with you, this Report will be published every
year.
2. Standards Followed
The 2009 AMOREPACIFIC Sustainability Report has been prepared in accordance with the G3
guidelines offered by the Global Reporting Initiative (GRI).
3. Period Covered
This Report covers AMOREPACIFIC activities from January 1 to December 31, 2009. Data from
2007 and 2008 have been included for comparative purposes.
4. Scope
This Report presents the activities and performance results of the AMOREPACIFIC Head
Office, the R&D Center, Human Resources Development Center, regional offices, Skin Care
Division, Makeup Division, Mass Cosmetics Division and 4 manufacturing plants. Basic
information is offered on subsidiaries, both overseas and domestic. In future Reports, we
will continue to disclose details of programs now underway according to sustainability
management action plans.
5. Report Assurance
To verify the accuracy and enhance the credibility of the contents, we received third-party
verification.
For Inquiries
Please contact the AMOREPACIFIC Strategic Planning Team at Hangang-ro 2-Ga 181, Yongsan-gu, Seoul, Korea
Tel. +82. 2. 709. 5399 / 5360
Fax. +82. 2. 709. 5339
Home page. corp.amorepacific.co.kr
e-mail. [email protected]
* The Report is our second Communication on Progress issued since our joining the UN Global Compact.
Report Summary
�
Introduction Economic Value Our Customers
6
CEO Message
8
Introduction to AMOREPACIFIC
10
Corporate Governance
11
BOD Composition & Operation
12
Sustainability Management
System
14
Communication with
Stakeholders
16
Ethical Management
17
Risk Management
22
Our Brands
24
Domestic Business
Performance
27
Global Business Performance
29
Financial Results & Added
Value Distribution
33
Development of Sustainable
Products
36
Greater Product Responsibility
37
Stronger Customer Relations
40
R&D Innovation
Our Environment Our Employees Our Business Partners
43
Our Response to Climate
Change
45
Minimizing Environmental
Impact Companywide
46
Green Communication
48
Environmental Performance
Results
51
Developing Employee
Capability
53
A Pleasant & Healthy Workplace
55
Open Communication
57
Compensation & Fringe Benefits
59
Win-Win Relationships with
Beauty Partners
63
Win-Win Relationships with
Suppliers
Our Community Appendix
67
AMOREPACIFIC CSR Activities
68
CSR Activities Centered on
Women
70
Employee-led CSR
71
Culture-centered CSR
72
Foundations for the Public
Welfare
74
Summary of Consolidated
Financial Statements
75
Domestic & Overseas
Operations
76
Environmental Management
System
77
GRI Index
80
Assurance Report
Contents
Creatinga BeautifulLife-
2009
AMOREPACIFIC
Sustainability
Report
AMOREPACIFIC is deeply rooted and growing in the fertile soil called "Nature."
At the same time we are committed to make life better for our customers.
As the Asian Beauty Creator, we are introducing the entire world to the beauty
methods of Asia. Our sustainability management program seeks to being people
and Nature together in harmony, earning us the respect of customers worldwide.
AMOREPACIFIC: the Asian Beauty Creator providing Asian beauty methods to the world.
�
UN Global Compact In November 2007 AMOREPACIFIC became Korea's first cosmetics maker to join the UN Global
Compact. We support the UNGC's ten principles in the areas of human rights, labor, the environment and anti-corruption,
and we are committed to living up to these principles at all times.
To Our Stakeholders, Accompanying Us on Our Beauty Quest
Countless paths lie in front of us all. The ones we choose moment by moment determine the course of our lives.
Therefore people are constantly agonizing over where to go next and how to get there.
Corporations are like this, too. We are pondering our next course of action at all times in the interest of sustainability.
AMOREPACIFIC has determined that "Asian Beauty" is a unique value that we can offer to our customers around the
world and thereby sustain our operation. In the process, we strive to make a "more beautiful world" in which more
people can enjoy greater beauty and happiness.
We spent 2009 soundly establishing the AMOREPACIFIC Way, our future direction in which to practice sustainability
management. Our new vision for sustainability management was announced at the company's 64th anniversary
celebration. In front of our stakeholders of all types, I promised our commitment to a sustainable approach that fosters
respect for nature, people and the corporation as we fulfill our mission of "Asian Beauty Creator." In that role we aim to
introduce Asian beauty methods to the entire world.
In addition, we have published this Sustainability Report, 'Creating a Beautiful life', to disclose how well we have lived up
to that promise during the past year.
AMOREPACIFIC's sustainability management program pursued five strategic directions in 2009: First was to continue
improving product safety and innovating for sustainability so that we earn greater trust from customers and new
growth opportunities. Second, we strove to minimize environmental impact at every stage of our operations. Third, our
work environments were improved to make AMOREPACIFIC a place where employees truly want to work. Fourth, we
dealt fairly with our business partners in the interest of long-term partnerships. Finally, CSR activities best suited to our
competencies were undertaken to advance along with our local communities.
Going forward, AMOREPACIFIC will continue to follow these five strategic directions in a bid to "build a handsome
respect for nature, people and the company." Nature is the matrix within which diverse stakeholders can all dream of a
sustainable future and usher in an era of healthy change.
Thus we shall fulfill our role as the Asian Beauty Creator, imparting beauty and well-being to customers inside and
outside Korea.
Thank you.
CEO Message
�
Kyung-Bae Suh, President & CEO
AMOREPACIFIC Corporation
We are a global company that provides customers with a total
beauty and healthcare products.
Vision for 2015 We have set our sights on growing AMOREPACIFIC into one of the Top ten
cosmetics companies in the world by 2015. To this end, we are cultivating ten mega-brands
that can allow us to realize our vision: Be a global provider of total beauty and healthcare
solutions.
Direction of Mid-/Long-term Strategy We will continue to uncover drivers of future
growth, applying our Asian beauty secrets to develop products that satisfy global customer
needs, and expand our global market position. In the process, we will lay the groundwork
for sustainable growth. At the same time, we will grow as a respected company that
acts responsibly by minimizing environmental impact and focuses on the needs of all
stakeholders.
AMOREPACIFIC Way We instituted the AMOREPACIFIC Way as a set of core values and
code of conduct for employees worldwide to share and follow in their roles as the "Asian
Beauty Creator." This credo covers the five core values of openness, innovation, proximity,
sincerity and challenge. "Openness" is the belief that true innovation and growth occur
when communication is taking place with those outside the organization. "Innovation" is
the passion to introduce new things to the world at all times, and "proximity" refers to the
willingness to remain at the customers' side in order to serve them. By "sincerity" we mean a
commitment to performing every task, no matter how small, to the very best of our abilities.
Finally, "challenge" expresses the spirit of never being satisfied with the status quo.
Introduction
Openness
Innovation
Challenge
Sincerity
Proximity
AMOREPACIFIC
Way
Direction of Mid-/Long-term Strategy
Accelerate growth in Asia Build a platform for profitable
growth
Constantly improve product environmental friendliness and safety
Strengthen "win-win" relations with business partners
Discover new drivers of sustainable growth
Cultivate megabrands
Global GreenGrowth
Vision for 2015
Global Top 10 Company
10
Current Board of Directors(2010)
Director Name Responsibilities Position
Executive Directors Kyung-Bae Suh
Sang-Bae Shim
Dong-Hyun Bae
Young-So Kwon
Chang-Soo Yang
Hak-Hee Kang
Overall Management
SCM and R&D
Business Support
Sales & Marketing
Marketing
R&D
Exec. Committee, BOD Chairman
Exec. Committee
Exec. Committee, NED Nominating Committee Member
Exec. Committee
Exec. Committee
Exec. Committee
Non-executive
Directors
Jae-Yong Song
Dong-Soo Kim
Eon-Oh Lee
Audit Committee Chairman, NED Nominating Committee
Audit Committee
Audit Committee
Major Shareholders
PACIFIC Corp. and 11 persons
49.6%
Others
35.2%
Mirae Asset Financial Group
7.6%
Fidelity Funds
4.7%
National Pension
2.9%
Corporate Governance Structure
AMOREPACIFIC was restructured under a holding company in June 2006 in order to bring the governance structure
in line with global standards and to focus core competencies on the beauty and health businesses. At the same
time, management was made more accountable and individual units became more specialized with stronger core
competencies. Shareholder value has risen steadily as a result.
BOD Composition & Authority The AMOREPACIFIC Board of Directors consists of nine registered members. Six are
executive directors who work for the company, and three are non-executive directors (NEDs). Every BOD member
is committed to promoting the interests of shareholders and other stakeholders. All are consummate professionals
who faithfully exercise their duties and fulfill their obligations in strict accordance with Korean commercial law and
the company's Articles of Incorporation. Each executive director was recommended for his position by the chief of his
organizational unit. The NEDs are professionally qualified in management or accounting and have extensive experience
working outside AMOREPACIFIC. They are nominated to serve as NEDs by a special committee, and their nomination
must be approved by vote at the general shareholders' meeting. Their professional opinions are reflected in the
decisions made by the Board.
BOD Operation The Audit Committee, Executive Committee, and Nominating Committee for Non-executive Directors
convene under the auspices of the BOD to improve overall decision-making efficiency. In 2009 the Board of Directors
convened five times; the Executive Committee met eight times, and the Audit Committee held five meetings. For the
benefit of shareholders, all final decisions by the Board of Directors are disclosed to the Financial Supervisory Service
and Korea Exchange.
Corporate Governance
11
President & CEO
Board of Directors
Audit Committee
Executive Committee
NED Nominating Committee
Personnel & General Affairs
Finance & Accounting
Chief Support Officer
Chief Production & Research Officer
Chief Marketing & Sales Officer
Supply Chain Management
R&D Center
Cosmetics
MC&S
Marketing
4 31 2
1211109865 7
Kyung-Bae Suh, President and Chief Executive officer
Hak-Hee Kang, Chief Technology Officer
Young-So Kwon, Executive Vice President, Cosmetics Counseling Sales BU
Sang-Woo Lee, Executive Vice President, International BU
Woo-Young Lee, President and Chief Executive Officer, PACIFICPHARMA Corporation
Min-Jeon Rhee, Executive Vice President, Cosmetics Retail BU
Yoon Lee, Chief Human Resource Officer
Dong-Hyun Bae, Chief Financial Officer
Jae-Chun Yoo, Executive Vice President, MC&S BU
Chang-Soo Yang, Chief Marketing Officer
Hyung-Geun Choi, Vice President, Pacific Corporation
Sang-Bae Shim, Chief Production Officer
1
2
3
4
5
6
7
8
9
10
11
12
Top Management
BOD Composition & Operation
12
Vision for Sustainability Management
5 Strategic Directions
Make Safe Products & Innovate for Sustainability Continue to improve product safety and innovate for sustainability, thereby earning
customer trust and creating growth opportunities.
Reduce Environmental Impact Companywide Minimize environmental impact along the entire value chain and raise eco-efficiency.
Be a Place where People Want to Work Continue to improve working conditions and ensure employees can balance their work
with their personal lives for greater satisfaction and a higher quality of life.
Prosper alongside Business Partners Treat all business partners fairly and build long-term relationships with them.
Make Meaningful Contributions to Society Foster the image of a socially responsible company by engaging in community service
programs that are ongoing and significant.
Mission
Asian Beauty Creator
Vision for Sustainability Management
Be a global player and Asia's most respected company in the beauty industry by 2015
Targets for 2011
10% annual growth in sustainable products
5% annual reduction in greenhouse gas emissions
Listed among Korea's 10 most respected companies
Make safe products & innovate for sustainability
Strategic Directions
Reduce environmental impact companywide
Be a place where people want to work
Prosper together with business partners
Contribute to society
We celebrated the 64th anniversary of AMOREPACIFIC's founding in September 2009. At the ceremony we announced
our new vision for sustainability management: Be Asia's most respected cosmetics company by 2015. To this end, we
will focus on gaining greater respect by bringing people and nature together in harmony through sustainable practices
to create a more beautiful world. At the same time, we will continue to help our customers to realize their aspirations
for personal beauty and health. In conjunction with the event, we issued our industry's first sustainability report, called
Creating a Beautiful Life, which specifically details our sustainability management activities and their results. The Report
was provided to all stakeholders. We will continue to issue the Report every year to disclose how we are carrying out our
plans and programs for sustainability management. This kind of constant communication with stakeholders is helping
our company to grow as a contributor to sustainable development.
Sustainability Management System
1�
CEO
Sustainability Management Committee 1
Chief Planning & Finance Officer
Sustainability Management Office 2
1 Sustainability Management Committee: Final Decision Maker Offers the direction for sustainability management to proceed
Reviews and decides key issues
2 Sustainability Management Office: Control Tower Establishes strategies to practice sustainability management
companywide and identifies the required actions to take
Manages projects for promoting sustainability management
Serves as communication channel with the outside and oversees
the issuance of reports
3 Sustainability Management Working Group: Policy Implementer Implements tasks to advance sustainability management
Reports on progress and issues to be resolved
Supports to publish the Sustainability Report
3
Customers
Customer Technology Team
Research & Analysis Team
Customer Service Team
CEM & CI Teams
Environment
Environmental Management Team
Production Support Team
BM & MI Teams
Employees
Corporate Support Team
Human Resources Team
Labor-Management Cooperation Team
Corporate Culture Team
Business Partners
Business Partners
Counseling Sales Strategy Team Cosmetics Retail SI Team
MC & S SI Team Procurement Teams 1&2
Social Contributions
CSR Team PR Team
Operational Apparatus
We established a sustainability management system in 2008 that makes the Sustainability Management Committee the
last word on our policy. The Committee is responsible for deciding sustainability management strategies. Meanwhile, we
established the Sustainability Management Office to serve as an internal and external communication channel. In April
2009 the Office reviewed 20 key tasks identified around the company for promoting sustainability management. The
tasks were implemented on two occasions, in August and November.
14
Question-naires
CustomersEmployeesSuppliers
Beauty partnersLocal communities & NGOs
Category Re-marks
Select & reflect key issues
Approach
Online survey for prosumers (804 responses)Online survey (6)Survey by email / fax (10 from raw material suppliers, 19 from packaging suppliers)Direct surveys (Arielle: 31, Counselors: 29)Email survey (Beautiful Foundation, Seonam Foundation)
Period
Dec. 11-27Dec. 8-18Dec. 8-15
Dec. 8-18Dec. 8-15
No. of Persons
109804
29
6011
Gather opinions
Customer InterviewsGraduate Students at Department of Consumer Studies, Ehwa Womans University
Dec. 14 12
Professional advice Ecosian CEO Jonghwan Eun1Feb. 3, 2010
Summary of Stakeholder Surveys
AMOREPACIFIC
Customer satisfaction surveys Customer complaint receipt and feedback
Prosumer activities
A-PAC, APRO (supplierconferences) Events to promote win-wincooperation with suppliers
Counselor conferences Arielle workshops, satisfactionsurveys
ABC Talk (survey on employeeattitudes)
Regular meetings between labor and management
Suppliers Beauty PartnersCustomers Employees
Local Communities ShareholdersNGOsThe Government
Community service programs Mécénat activities
Regular shareholders' meetings IR events, performance reports
Meetings with consumeradvocacy and environmental groups Join public service campaignswith NGOs
Visits to and meetings with government organizations Activities of Cosmetics-related Committees
Types of Communication with Stakeholders
Our stakeholders can be classified generally as customers, employees, suppliers, beauty partners, local communities, the
government, NGOs, and shareholders. We communicate to each group in a variety of ways. In the future, communication
will be stepped up even more as part of our efforts to be the company that stakeholders can count on.
2009 Stakeholder Survey
We surveyed stakeholders directly via various channels in 2009 to hear what they had to say. Customers were interviewed
and professional advisors were also consulted. These surveys enabled us to collect suggestions on what are the most
important issues facing AMOREPACIFIC and the directions in which we must put greater attention going forward. Such
feedback from stakeholders also informed us on what should be included in the annual Sustainability Report.
Communication with Stakeholders
15
Key Issues
Identification of Issues
Business Impact High
Stronger Social Stature for Sales AgentsBalance between Work and Life
Local Community Development
Employee Diversity
Social Value Product
Risk Management
Brand Management
Discrimination Prevention
Employee Training and Career Development
Employee Health & Safety
Ethical Management
Social Contribution
Responsible Marketing Practices
Better Product Safety
Better Customer Management
Global Market Expansion
Development of Environment-friendly Products
R&D Environment-friendly Operations
Stak
ehol
der C
once
rns
Hig
h
Lower Environmental Impact of Company Operations
Response to Climate ChangeWin-Win Relations with Suppliers
Identify the pool of
CSM issues
Stakeholder
Concern
Business
Impact
Material
Issues
Labor-management Relations
Governance Structure
Labor-management Relations
Examine CSM standards
Identify CSM policy
direction
Analyze competitors
Analyze the media
Analysis of internal &
external stakeholder
interest
Analyze effect of these
issues on value creation
and their strategic links
with AMOREPACIFIC
Stakeholder Concerns
Impact on the Company
Material issues
Key Issues for AMOREPACIFIC
In conjunction with the 2009 Sustainability Report, we have ascertained the issues that internal and external
stakeholders consider important. These issues have been objectively analyzed to establish our priorities. The topics
covered in this report were selected because they are of concern to all stakeholders.
1�
* The figures in parentheses the percentage of employees in the total workforce to receive training.
Participants in Ethical Management Training (persons)
2007 2008 2009
Ethical Management is Global Competitiveness 2,982(90.4%) 3,156(88.7%) 3,269(89.2%)
Beautiful Company, Ethical Leader 699(21.2%) 705(19.8%) 1,148(31.3%)
*
AMOREPACIFIC announced a new ethical management policy in September 2003 to achieve sound company goals
through clear awareness of business ethics and proper business practices. At the same time, we aim to fulfill our
corporate social responsibilities and contribute to social development as a corporate citizen. This policy is a prerequisite
for carrying out the business activities that will enable us to realize the AMOREPACIFIC corporate mission. It is also the
basis for our sustainable growth.
Stronger Ethical Awareness & Training
We continue to raise employee awareness on the importance of ethical business practices. A roadmap has been
established for making greater use of our corporate ethics platform, and preparation is underway for its implementation.
This includes disseminating a stronger and more comprehensive Code of Ethics, applying the ethical compliance system
more aggressively, and developing new programs for implementing the Ethical Code internally as well as externally. The
related training and public relations programs are being upgraded, too. Companywide online training programs "Ethical
Management is Global Competitiveness" and "Beautiful Company, Ethical Leader" continue to be run, and an annual
campaign is launched to encourage employees to refrain from giving or accepting gifts in work-related situations. An
online channel is available for whistleblowers who witness irregularities that occur despite the ethics training and
various other preventative activities. Moreover, the ethical management is being expanded beyond the AMOREPACIFIC
Head Office to include suppliers and overseas subsidiaries.
Voluntary Compliance with Fair Trade Policy
Each year, our newly hired employees are required to sign a pledge obligating them to comply with fair trade practices,
helping to raise their awareness of the laws governing fair trade. We also revised our handbook on fair trade in order
to alert our employees to recent changes in the relevant laws. The new handbook edition has been distributed
companywide in March 2009. In April 2009 we reorganized our online fair trade help site, making it more easily
accessible to all employees and providing all the information that they may need. In addition we organized a special
training program at our four main worksites (Seoul, Daejeon, Daegu and Gwangju) for the employees who are most
likely to confront fair trade issues. This program also raises awareness of the need to comply with the law and with
ethical business practices. Our efforts earned the AMOREPACIFIC compliance program an "A" rating from the Korea Fair
Trade Commission in 2007.
Ethical Management
1�
In 2010, we will focus our risk management effort on four areas that are the most exposed to the changes in the business
environment, thereby strengthening our platform for sustainable growth. Our responsiveness in these areas is being
enhanced by upgrading our systems for monitoring and responding to major risks, both internal and external. We are
also sharing case studies of risk management failures, and organizing classes on them.
Risk Management by Year
2007 2008 2009
Potential risks managed 119 123 164
Actual problems incurred 47 71 111
2006ERM established
2009New risk
categories added
2007ERM reinforced
2008ERM upgraded
Note: ERM stands for "enterprise risk management," a companywide approach.
Risks identified at division &team levels, categories selected for monitoring
List of managed risks classified& standardized
Risk factors reflecting domestic and overseas economic conditions, and a priority list of operation risks are added
Risks are managed on the basis of scenarios
A system is created for categorizing risks
The list of managed risks is upgraded
Risk management coversprobable risks as well the history of actual problems
Risks are categorized accordingto probability (high, medium, low)
In 2009 we engaged in companywide preemptive risk management activities to elevate managerial visibility amid
uncertain global economic conditions. Our focus was on the strengthening confrontation system that could address
those risk factors that can erode profitability. We diversified our import channels to address the severe fluctuations in
exchange rates and raw & processed material prices. We also eliminated some of the factors that drive up production
costs by reducing the number of products in the portfolio that rely heavily on imported raw materials. Of course, cost-
cutting efforts were pursued companywide as well. In addition, we strengthened sales networks and distributors, and
raised distribution channel competitiveness as a proactive measure for dealing with the rapidly-changing distribution
environment.
Risk Management
AMOREPACIFIC is first to introduce new products and approaches in Korean
cosmetics industry and has remained the nation's foremost cosmetics maker. Now
we have begun to ensure sustainable growth by expanding our business overseas.
We are passionate about taking on new challenges and will share the fruits of our
sustainable growth and sustainable future with all of society.
Sustainable growth, a sustainable future
Strengthening the platform for sustainable growth throughout
continuous innovation.
Strong annual growth continued at AMOREPACIFIC in 2009 despite the overall sluggish
economy in the wake from the global financial crisis. Pinpointing hidden customer demands
amid an economic downturn enabled us to strengthen customer relations and develop
powerful new products to maintain our growth momentum. Improved sales capabilities also
bolstered our market position. Our proactive investment activities and ongoing innovation
efforts enabled us to overcome the economic crisis as well as widen our lead over the
competition. They also provided the basis for evenly balanced sales within our product
portfolio and surging profitability.
In 2009 AMOREPACIFIC achieved operating profit of KRW 309 billion and net profit of KRW
226 billion on sales of KRW 1,940 billion. Cosmetics division delivered sales growth of
16% year on year, while MC& S division generating growth of 13%. Importantly, our China
business surged 55 percent, providing a solid platform for global sales growth.
Economic Value
Domestic
88.7%
Company
18.8%
The Government
8.9%
Shareholders
3.8%Local Communities & Others
1.3%
Cosmetics
84.8%
Employees
31.8%Beauty Partners
35.5%
Mass Cosmetics & Sulloc(MC & S)
15.2%
Overseas
11.3%1,940(KRW in billions)
1,940(KRW in billions)
Sales by Division
Sales by Region
Economic Value Creation & Distribution
Note: Based on consolidated performance results for AMOREPACIFIC.
999(KRW in billions)
22
Sulwhasoo
Sulwhasoo products are based on
traditional medicine concepts and
emphasize healthy, balanced mainte-
nance of skin. Carefully selected
herbal essences provide an outstand-
ing efficacy that makes the Sulwha-
soo stand unchallenged in its seg-
ment in Korea, and its presence in
other markets continues to grow.
www.sulwhasoo.co.kr
Mamonde
This brand, which stands for bright
and lovely femininity, has gained
great popularity in both the Korean
and Chinese markets. Natural ingredi-
ents extracted from flowers help give
the skin a completely natural look.
www.mamonde.co.kr
AMOREPACIFIC
AMOREPACIFIC is a luxury cosmetics
brand that is well established glob-
ally. The brand is also a definitive
statement on the history and beauty
philosophy of AMOREPACIFIC and
represents our quest to be the best.
Rare Asian botanical ingredients and
innovative technologies are applied
to promise users the healthiest and
most beautiful skin possible.www.amorepacific.com
Hera
We launched this prestige beauty
brand in 1995 and have continued to
pursue in-depth research in cell sci-
ence to create beauty solutions that
can realize the wearer's dreams for a
youthful and glamorous look.
www.hera.co.kr
IOPE
IOPE is a "cosmeceutical" brand that
offers solutions to severe skin prob-
lems. The products are scientifically
formulated to revitalize the skin, sat-
isfying customers who are looking to
improve their skin condition.
www.iope.co.kr
Laneige
Laneige products are meant for Asian
women who want to create a unique
look that is unconstrained by conven-
tion. They are particularly popular for
their scientific use of water and light
to give skin a snowy transparency.
www.laneige.co.kr
Our Brands
2�
Innisfree
Innisfree features all-natural herbal
ingredients that promise clean and
clear skin. The Innisfree brand shop
offers the benefits of a herb garden,
stimulating both body and mind.
www.innisfree.co.kr
Sulloc
Sulloc, Korea's leading green tea
brand, uses tea cultivated solely on
plantations operated by AMOREPA-
CIFIC. The products are available in
leaf, teabag and powdered form.
Customers can also enjoy the health-
ful benefits of these products at the
O'sulloc Tea House chain. www.sulloc.co.kr
Happy Bath
This is a "total body care" brand of
trustworthy products that exclusively
use natural, organically-grown ingre-
dients. The alluring aroma imparted
by top-quality Happy Bath sk in
cleansers and moisturizers have
made this brand a leader in the mass-
cosmetics market.
www.happybath.co.kr
Hannule
Hannule is based on Asian herbal
medicines and exemplifies Korean
thinking and approaches toward
beauty. All the ingredients are culti-
vated in Korea and the formulation is
designed specifically for Korean skin
types.
www.hannule.com
Ryoe
Ryoe is our high-end herbal medicine
hair care brand. The name alludes to
a rhythmical balance of Yin and Yang
to keep the scalp in its optimal condi-
tion. Carefully selected herbal ingre-
dients not only help prevent hair loss
but also provide hair with a healthy
sheen.
www.ryoe.co.kr
Lolita Lempicka
Lolita Lempicka is a global brand that
remains popular for its romantic fra-
grances and artistic container design.
The line includes the original "Lolita
Lempicka" perfume, second fragrance
"L de Lolita Lempicka" and "Si Lolita"
which was launched recently.
www.lolitalempicka.co.kr
24
Cosmetics
The global economic slump dampened household consumption, but AMOREPACIFIC managed to spearhead sales
growth in the industry and solidify our position as the undisputed Korean market leader. Our forward-looking
investment reinforced our distribution portfolio and differentiated the marketability of our products, which elevated our
brand power. As a result, we were able to increase our market dominance in both the luxury and premium sales channels.
Luxury Cosmetics Sales revenue from luxury cosmetics continued to rise rapidly in 2009. We expanded the premium
lines under our leading brands, and these products sold well. For example, sales of our Sulwhasoo herbal medical
cosmetics performed as a true "mega-brand," with sales rising 11 percent year on year. Making this possible was the
popularity of Sulwhasoo Extra Refining Cream, and the influx of new, younger customers after we expanded the Snowise
(Soo) line of whitening care products. Meanwhile, the image of our AMOREPACIFIC brand was reinforced in 2009 as
increasing the number of sales counters and its popularity of the Time Response line.
In 2009 we worked to build up the competencies of the 33,000 counselors who perform door-to-door sales for us. We
also hired an additional 3,000 counselors, improving the productivity and efficiency of this sales channel. The expansion
in channel size was accompanied by 6 percent higher sales than in the previous year.
Business at Korean department stores was booming despite the general economic downturn, as the weaker Korean Won
currency kept many Korean travelers at home. Thus, the sales growth momentum AMOREPACIFIC saw at department
stores in 2008 continued into 2009 with another 19 percent increase, the highest annual surge in five years. As a result,
our Sulwhasoo brand position strengthened as the top cosmetics seller in domestic department stores. Additionally, we
opened department store sales counters for Lirikos, a prestige brand for customers in their 20s and 30s, in August. Thus,
the groundwork has been laid to expand our share of the department store sales channel.
Amorepacific Shop in department store
Domestic Business Performance
25
Premium Cosmetics Aritaum was launched in 2008 as a specialized franchise that offers total beauty solutions, which
include product formulas for specific skin types and personal beauty counseling services. We began by converting
HUE Place shops to carry only AMOREPACIFIC products and additional Aritaum shops have subsequently been opened.
Aritaum's success boosted our premium cosmetics sales by 29 percent in 2009 and has revolutionized the market for the
specialty in Korea. The Aritaum store showed over 10 percent same store sales growth, and approximately 1,050 shops
were in operation by the end of the year. Distribution through these uniquely positioned shops has enabled us to attract
more customers in their 20s and secured a competitive edge by expanding the product lines in our premium mega-
brands. (IOPE, Laneige and Hannule)
For example, Retinol NX and Super Vital are powerful new additions to the IOPE family, enhancing our special-function
offerings and elevating our position in premium cosmeceuticals. The Hydra line, which targets younger women, was
launched under the Laneige label, and Laneige sales to 20s rose 70 percent year on year. Thus, Laneige has emerged
as a major "young premium" brand. The premium Geukjin (Utmost Care) line was introduced under the Hannule brand,
bolstering a brand image of cosmetics that work on the principles of Asian herbal medicine.
Meanwhile, we decided to spin off the Innisfree brand to strengthen its position in the brand shop segment. This is
the first step for securing greater competitiveness through quick decision-making and new product launches in the
fast-changing brand shop market. Aggressive investments are also being made to increase market share. Starting
in 2010, Innisfree will be operated as an independent subsidiary of Pacific Corporation. The number of sales outlets
will be increased, and a separate marketing program will be launched. We are also bolstering our leadership in other
distribution channels by launching products sold exclusively through the home shopping channels and by bolstering
marketing at points of customer contact. Such aggressive response to distribution channels will increase premium
market share for AMOREPACIFIC.
Aritaum Shop in seoul
2�
Mass Cosmetics & Sulloc Tea
Our primary goal has long been on promoting key product categories and flagship brands, raising profitability and
increasing our share of the mass-market cosmetics and green tea segments. In 2009 we successfully launched new
premium products with functions that set them apart from the competition, restructured the product mix around
highly profitable brands, and managed costs effectively. As a result, we managed to elevate our market leadership and
profitability at the same time.
Competition intensified in the channels that distribute personal care products and green tea, while consumer sentiment
was lackluster and material prices rose. Despite these adverse conditions, we saw our sales in these segments rise 13
percent year on year in 2009.
We launched our Ryoe herbal medicine hair care brand two years ago and Ryoe is now Korea's most popular product for
combating hair loss. Our success with Ryoe has contributed greatly to our reaching the top of the domestic shampoo
market. Moreover, we reorganized Mis-en-scene, our leading hair care brand, launched the Essential Damage Care line
and introduced the repair hair pack. Now Mis-en-scene has become a mega-brand, with annual sales of more than KRW
100 billion.
Our Happy Bath brand leads the domestic market for body cleansing products. Rapid sales growth has been maintained
as we intensively develop our moisturizer, facial cleanser, sun care, and body cleanser lines. Importantly, we have
diversified the products that feature natural, organically grown ingredients, resulting in a steady increase in our share of
the moisturizing and cleansing product segments.
The overall market for green tea has contracted in Korea, but our Sulloc brand posted sales growth for the first time
in five years. Our O'sulloc Teahouse theme cafes and O'sulloc Teashops in department stores provided the platform
for a premium business. Consumers can also take our top-quality green tea home in leaf or teabag form, and we have
introduced new products such as the Water Plus, laying the groundwork for another growth surge.
O'sulloc Teahouse: popularizing the tradition of drinking green tea.
2�
Sales by Region (KRW in billions)
2008
234
9
76
53
96
2007
174
8
47
78
41
2009
283
11
118
97
57
China / France / Asia / US
Asian Market
China represents an essential part of our global business. We reached the breakeven point in China in 2007, and both
sales growth and profitability have increased steadily since then. In 2009, Laneige and Mamonde sales were more than
50% higher than they were in 2008, and our overall operating profit margin reached double digits.
We introduced various new products under the Laneige brand in 2009 and we reinforced our marketing activities at
the points of customer contact. At the same time, we continued to promote Laneige as a "young premium brand" in
China and elsewhere in Asia, driving sales growth in the region. We also added more Laneige sales counters in Chinese
department stores and at Duty Free shops in Singapore, Taiwan and Hong Kong, boosting Asian recognition of the label.
New Mamonde shops and department store sales counters were opened throughout the year, greatly enlarging the
scale of Chinese Mamonde operations. The higher sales enabled Mamonde to go into the black in China in 2009. At the
same time the brand achieved double-digit sales growth in Asia.
Laneige store in Shanghai Mamonde store in Shanghai
Global Business Performance
28
Major Achievements in Advanced Markets
The business structure in France, the US and other advanced markets improved in efficiency in 2009. The main focus was
on boosting profitability and brand image. The global economic slump curtailed consumption in the advanced markets,
but we searched for hidden customer demands and strengthened our sales capabilities. These efforts enabled us to
raise sales slightly over the previous year's figures. At the same time, expenses were carefully controlled, greatly lowering
chronic operating losses and laying the groundwork for profitable growth in 2010.
Our Lolita Lempicka perfume brand enjoys a global stature in France, and the addition of Si Lolita in the second half of
2009 revived slumping perfume sales. In the US we reinforced our sales capabilities and saw our sales rise 25 percent at a
time when our competitors were experiencing falling sales.
We worked to build a global premium brand image in Japan, which is one of the world's most important and advanced
beauty markets, as well as in Hong Kong in 2009. New sales counters for the AMOREPACIFIC brand were installed in two
of Japan's most exclusive department store chains, Isetan and Mitsukoshi. We also began preparations for growing a
global brand at the high-end of the market by reinforcing marketing in Hong Kong with the launch of the Sulwhasoo
Flagship Store & Spa.
Sulwhasoo Store in Hong Kong
29
Operating Profit (KRW in billions) Net Profit (KRW in billions) Sales (KRW in billions)
ROA (%) ROE (%)
Economic Value Creation & Distribution (KRW in billions)
2007 2008 2009
Employees* 223.8 254.0 317.4
The Government** 75.2 82.6 88.8
Local Communities 2.3 2.6 9.9
Creditors 1.8 2.3 2.5
Shareholders 34.5 34.5 38.0
Company 144.7 149.6 187.9
Beauty Partners*** 283.4 313.9 354.2
Distributed Economic Value 765.6 839.5 998.8
* These figures combine the cost of fringe benefits, retirement benefits and salaries, which include the cost of sales and S&A expenses.
** These figures represent taxes and dues, which includes consolidated income taxes, the cost of sales and non-operating expenses.
*** These values are the portions for Amore Counselors and Aritaum shops.Note: When calculating economic value distribution, the profit or loss from discontinued businesses was not factored into the amount distributed to stakeholders.
14.1
11.8
20.316.5
2007 2008 2009 2007 2008 2009
13.7
18.7
2007 2008 2009
1,940
234246
178 170
1,6781,457
2007 2008 2009 2007 2008 2009
309
226
Financial Results & Added Value Distribution
We have been accompanied by wonderful companions along the path we have
followed for the past 65 years. The path that we must take in the future, too,
will be traveled in concert with nature & customers, employees & business partners,
and local communities as we continue our quest to realize the beautiful
world sought by all.
Coming together to make a more beautiful world
Customers
Greater Product
Responsibility
Safe Materials & Products
Safe Production Processes
Legal Compliance & Hazardous
Material Control
R&D Innovation
Innovative Technology
Development
Global Connect &
Development
Stronger Customer
Relations
Communication with
Customers
Customer Satisfaction
Activities
Development of
Sustainable Products
Customer-friendly Products
Earth-friendly Products
Society-friendly Products
AMOREPACIFIC formally accepted unconditional responsibility for product quality
in 1993 and has remained committed to satisfying our customers' expectations ever
since. To this end, we have continued to improve our R&D innovation. The goals are to
develop sustainable products, pursue ongoing product innovation, assume ever-greater
responsibility for all product aspects, and stay close to the customers through open
communication.
Our Customers
��
Sustainable Products for AMOREPACIFIC
Society-friendlyEarth-friendlyCustomer-friendly
Use ingredients organically grown / LOHAS certified
Preserves water quality & aquatic ecosystems / Carbon footprint calculated
Use materials procured through the Beautiful Fair Trade program
Apply creative innovations to develop safe products that customers can use with confidence, minimize environmental impact, and promote local community interests.
Definition of "Sustainable Product"
Our sustainability management program was established in 2008, and one of the five strategic directions identified for
this program was "safe products & sustainable innovation." In 2009 we defined what we mean by "sustainable product"
to support the effort to develop new products that conform to our new companywide strategy for sustainability. R&D
now proceeds according to this definition. For us, "sustainable products" are the result of creative innovation. They
must be customer-friendly products that inspire customer confidence for safety, earth-friendly products that have
minimal environmental impact, and society-friendly products that promote the interests of local communities. We have
subdivided the categories that go along with this definition of "sustainable products," and 35 new items were developed
accordingly in 2008 and 2009. Every unit in the company will continue this effort going forward to increase the number
of "sustainable products" in the portfolio by 10 percent a year.
Ecocert-certified Happy Bath baby creamLOHAS-certified Song Yeom toothpaste
Customer-friendly Products
We are intent on developing products that customers can trust and feel safe in using. 13 new items were developed the
"customer-friendly" category in 2009, raising the total to 19 since 2008.
LOHAS Certification for 3 Song Yeom brand (12 items) The Korean Standards Association conferred the Korean
LOHAS (for "Lifestyles of Health and Sustainability") certification on three types of Song Yeom brand (12 items in all)
from AMOREPACIFIC. This certification means the product satisfies strict standards for health, the environment, personal
development, sustainable living, and social justice. The Song Yeom brand was so recognized for the natural ingredients,
including organically grown substances, and the mild anionic surfactant that it contains.
Ecocert Recognizes Happy Bath Chamomile Baby Cream Ecocert is a European-based organic certification
organization that conducts inspections in over 80 countries worldwide. Our Happy Bath baby cream product was
awarded the Ecocert label in May 2009 because at least 95 percent of the ingredients are natural and more than 10
percent are organically grown. Moreover, the product does not contain silicon and other chemical substances not
condoned by Ecocert. Chamomile Baby Cream contains no artificial colors, paraffin, ethanol or artificial fragrances, which
could irritate sensitive baby skin.
Development of Sustainable Products
�4
Earth-friendly Products
We are committed to creating products that reduce natural resource use and minimize the environmental load. A total of
16 new products were completed in this category in 2009.
Korea Eco-label for 3 Body Cleansers (8 items) In August 2009 the Korea Environmental Industry & Technology
Institute conferred the Korea Eco-label on three types of Happy Bath body cleanser, featuring 96 percent natural
ingredients. These products contain a lower percentage of hazardous substances than required for the standard, while
they are highly biodegradable and their packaging is easy to recycle and contains no toxic substances.
Carbon Footprint Label Certification for 5 Mis-en-scene Shampoos & 3 Happy Bath Body Cleansers The Korean
Ministry of Environment conferred its Carbon Footprint Label on Pearl Shining Shampoo and four other shampoo
products of Mis-en-scene brand as well as three types of Happy Bath body cleanser. The carbon footprint labeling
system indicates the total carbon dioxide emitted during the entire product lifecycle, from production to distribution
and consumption. AMOREPACIFIC participated in a pilot Carbon Footprint Label certification program in 2008 and will
continue to develop more products that comply with the program's strict standards in 2010.
FSC-certified Paper We have been using paper certified by the Forest Stewardship Council for the AMOREPACIFIC
brand manual since 2008. In 2009 we also used this paper to produce 3.6 million copies of the Sulwhasoo brand manual.
FSC certification means the paper was made from wood produced in a forest managed to enhance the long-term social
and economic well-being of workers and local communities, and conserve the forest ecosystems.
Happy Bath products that have received Korea eco-label.
Sulwhasoo brand manual using FSC-certified paper.Mis-en-scene shampoos that bear the Carbon Footprint Label.
�5
3 Principles of Beautiful Fair Trade
Contribution to Local Communities
We use materials produced by local communities on a long-term basis,
thereby contributing to their sustainable development.
Preservation of the Environment
We minimize the environmental impact of every process, from ingredient cultivation
and processing to shipment.
Safety of Materials
We carefully monitor cultivation of product ingredients to ensure the users
are confident that our products are safe to use.
Society-friendly Products
We seek to develop new products that can contribute to the value of local communities as much as possible.
Beautiful Fair Trade We launched the Beautiful Fair Trade program in 2010 as part of our sustainable product
development effort. This program calls for us to select and purchase raw materials according to three principles:
safety, environmental preservation and contributions to local communities. Our goal is to make positive contributions
to protecting the environment and supporting the livelihoods of residents in local communities. Our first partner in
the Beautiful Fair Trade program is Dongbaek ("Camellia") Village (in Seoguipo) on Jeju Island. We signed a long-term
agreement in February 2010 to buy camellia seeds and flowers, which have been harvested in an environment-friendly
way. In the process, we have provided more than 150 residents with a stable source of income. This program will be
expanded steadily to other materials.
Dongbaek Village residents, who cultivate camellia seeds and flowers on Jeju Island.
��
Before Development During Development After Development
Determine the ingredients conform to the law
Determine the ingredients conform to company rules
Select ingredients and determine permissible quantities on the basis of
safety assessments
Select safe formulations
Evaluate safety while considering application methods and devices
Make final formulation decision on the basis of integrity, stability, safety and
efficacy
Reexamine finished, packaged products for safety
Monitor customer complaints
Take corrective action whenever necessary
Phthalates 1,4-dioxane Formaldehyde Parabens
These substances are banned internally, and we carefully monitor subsidiary materials with phthalate additives.
This substance is prohibited by law, and internal regulations require us to monitor for materials that may contain trace amounts.
We are reducing paraben use, starting with the butyl and propyl groups. Some paraben-free formulations are already on the market.
Formaldehyde and formaldehyde releasing preservatives are not used internally, but we monitor for natural occurrences or unintentional inclusion of these substances.
Processes of Product Safety Management
We systematically manage the safety of our products every step of the way, starting with the selection of ingredients, to
the actual product development and post-launch monitoring. At the pre-development stage, we examine the chemical
properties of potential ingredients, along with their manufacturing processes, material safety data sheets, and toxicity
reports. We must determine that the ingredients comply with the law and our internal regulations before a material
safety assessment is conducted. Then the actual ingredients are selected and the permissible quantities are decided. In
the product development stage, candidate formulations are tested for skin irritation, eye irritation, skin sensitization and
other safety issues, and the test results are used to select the optimal formulations and verify product safety. These tests
take the consumer environment into account, to include the possibility of consumer misuse or abuse of the product
as well as differences in the way consumers apply the products and in the applicators they use. The final formulation
must satisfy both internal and external standards for integrity, stability, safety and efficacy. Consumer protection is our
overriding concern. Therefore, after development, we evaluate their safety in finished and packaged form to ensure they
will remain safe in the hands of consumers. Our Consumer Complaint Management System provides customers with a
channel for voicing product safety concerns, and their feedback is reflected in the corrective action we take.
Categories & Standards for Toxic Substance Control
AMOREPACIFIC complies strictly with laws on the concentration limits of substances as well as on banned substances.
Our internal regulations governing certain ingredients are even stricter than what the law allows.
Non-animal Testing in Research
We are developing alternatives to animal testing in answer to the public's call for stronger protection of animal rights
while fulfilling our obligations to ensure product safety. Non-animal testing methods started being used for five test
categories (phototoxicity, eye irritation, skin sensitization, primary skin irritation, and skin absorptioin) in 2009. Four
additional alternative testing methods are currently under study, and a total of nine non-animal tests will be conducted
within these five categories from 2010. Importantly, acquiring and implementing alternative methods to animal testing
is an opportunity to improve the accuracy and predictive ability of our assessments. We also will continue adding new
tests to our R&D program. For example, methods for testing genetic toxicity will be studied in 2010.
Greater Product Responsibility
��
2009 CGAP Best Practices on Display
In 2007 we organized our first annual exhibition of CGAP results, enabling employees to share and learn from one another's experience.
Employees from AMOREPACIFICE and affiliated companies were invited to the 2009 exhibit, held under the "Sharing & Understanding"
theme, for a chance to hear directly what the customers have said, both good and bad. In addition, employees from AMOREPACIFIC and
suppliers are invited once a year to a venue where they can experience first-hand the sources of customer complaints. The company
intranet has also been upgraded so that employees can easily access the details of complaints that have been received from customers.
Product-related Corrective Actions
Complaint Resolution Rate*
* No. of resolved complaints/No. of complaints received x 100
2007
97.7%
2009
99.2%
2008
98.0%
2007
84 times
2009
94 times
2008
79 times
Communication with Customers
Customer Gifts for AMOREPACIFIC (CGAP) We consider customer criticism as a gift that can help us to improve. Our
CGAP program is designed to ascertain customer inconveniences and complaints quickly and accurately, forward that
information to the relevant units, and take corrective action accordingly. The goal is to address even minor complaints
and prevent problems in order to remain as close to the customers as possible.
CCMS Certification In December 2009 AMOREPACIFIC obtained certification of CCMS (Consumer Complaints
Management System). The system was developed to promote sustainability management, encouraging Korean
companies to prevent customer complaints and to settle complaints promptly when they do occur. The CCMS is
now being considered as an important platform to improve the company's overall activities from marketing to R & D.
Through the business upgrade, AMOREPACIFIC will enhance the customer satisfaction. To qualify for the CCMS mark,
we established regulations for customer-related business activities and services at each division. We also have uniform
customer service rules that conform to those at Aritaum "total beauty solution" shops, and intensive training is being
provided to our sales people working in the field. In 2010, the CCMS in Korea will be applied at overseas subsidiaries as
well to elevate the global competitiveness of our services.
Prosumer Activities Participants in our Prosumer (“producer + consumer”) program serve as partners who monitor
AMOREPACIFIC products. About 640 persons took part in 2009, posting more than 3,000 product reviews on their blogs.
They also submitted 146 suggestions on how to improve our products and services, and we have made use of their
ideas. Our Clean & Green Program was instituted to boost our interaction with the prosumers. Those who offer the best
suggestions are invited to tour our R&D center and production facilities, getting a first-hand look at our environment-
friendly production processes and hygienic working conditions. Through the experience inspires the customer's trust,
prompting them to spread on our green management activities to the society .
Stronger Customer Relations
�8
Products "I'd like to see more products that promote healthy
skin. Our trust would grow if you can introduce organic products
and the like that we can use with confidence." "Please tell us
more about products that have been certified by Eco-cert. Many
people (in Korea) still are not familiar with Eco-cert. A more
aggressive PR campaign in this regard is likely to spark greater
interest in environment-friendly products." "I heard that you
directly research and manage the ingredients that go into your
brands that apply principles from Oriental medicine such as
Sulwhasoo and Hannule. I would like you to increase the number
of ingredients that you manage for safety this way."
Packaging "Once cosmetics are purchased, the packaging is
quickly thrown away. I think really expensive wrapping material is
a waste. Please use more of the simple and environment-friendly
packages that we now see on some brands." "The packaging for
environment-friendly products should also be sophisticated and
stylishly designed. Despite your good intentions, a product that
looks unattractive and is inconvenient will not get used." "I heard
you use environment-friendly paper to make the Sulwhasoo
manual. Please increase the amount of environment-friendly
paper that you used in your product packaging. That way, you
help to protect the environment and you give customers a
chance to take part in the environmental protection effort."
Interview with Stakeholders Graduate of Ewha Womans University
DCC Activities The Direct Consumer Contact program was developed as a channel for our marketers to meet with
consumers, observe their behavior, and understand. The goal has been to discover hidden demands of consumers and
then develop innovative products to meet those needs. The program was getting established up until 2008, and the
expansion phase began in 2009. AMOREPACIFIC exercised DCC through the DCC School expansion for employees, DCC
activities linked to the development of new product concepts, and DCC projects designed to doscover hidden consumer
demands. The results of these activities led to the introduction of V=B Ginseng Berry Extract and three other products.
The DCC School, a formal training program at AMOREPACIFIC, was conducted three times in 2009 with a total of 66
persons completing the course. They learned how to observe consumers effectively and gain insights from what they
see. The trainees were very satisfied with the upgraded curriculum, which incorporates theoretical elements (concept
deduction methodology) with practice to raise learning effectiveness.
The global expansion of DCC is set to begin in 2010. Fieldwork will be conducted in China, and greater effort will be put
on discovering consumers' hidden demands and developing innovative products to satisfy demands. We expect many
great new product ideas will be generated result from our in-depth interviews with consumers and observations of
them. Those ideas will then be translated into products that will help increase our market share.
�9
2008
Department store, Aritaum, Discount store, Innisfree
January 2009
O'sulloc Tea Shop
November 2009
Door-to-door
April 2009
Estherapy
Integration of Beauty Points Program
Customer Satisfaction Activities
Integrated Beauty Points Program The "Beauty Points Program" awards points that are equivalent to 5 percent of the
purchase price for our products. We introduced the program at department stores, discount stores, Aritaum shops and
Innisfree shops in 2008 and extended it to O'sulloc Tea Shops and Estherapy as well as to door-to-door sales in 2009. Now
points are accumulated when purchasing any of our products through any channel nationwide, to include more than
2,500 sales outlets and some 36,000 AMORE Counselors. In addition, customer management is no longer performed by
brand or channel. We have integrated the process companywide, raising customer satisfaction and providing individual
customers with freer access to all our products and services.
Lifetime Customer Campaign We instituted the Lifetime Customer Campaign to ensure maximum customer
satisfaction over the long term, offering customized products, benefits and communication that best serve each major
stage in the individual's life. This Campaign changes the way we manage customers. Instead of emphasizing products
and sales, we now provide a tailored benefits package reflecting each customer's purchase history. Our communication
with customers has also been upgraded by considering individual interests or currently-used products to offer optimized
solutions. We also include our specialized customer management know-how in our field training programs to elevate
overall sales capabilities. In 2010 the Lifetime Customer Campaign will be expanded to personal care products, online
sales and Chinese customers, as we continue to maintain the best possible customer relations.
Customer Information Security We protect customer data through a multilayer security apparatus that includes
database encryption, database access control and PC storage media control. Additional measures such as data
leakage prevention and digital rights management are being taken in 2010 to prevent the leakage, misuse or abuse
of employees' personal data. The Information Security Center has been newly established at the company level to
approach the task of data protection systematically according to international standards. The ISC is conducting privacy
impact assessments, analyzing the customer data lifecycle (collection, storage, use and disposal) to discover and correct
any weaknesses systematically and continuously. As such we have established a platform for acquiring ISO 27001
certification for our information security management system.
40
New Research Papers & Patents by Year
2007 2008 2009
Research Papers 57 54 48
Domestic Pending 174 242 229
Registered 72 95 47
Overseas Pending 58 45 77
Registered 9 11 16
R&D Investment Outlays
2007 2008 2009
R&D Expenditures(millions of Won)
46,888 53,704 56,209
Percentage of Sales
3.46 3.51 3.18
Technology Innovation
Polymeric Micelle Network Emulsion The AMOREPACIFIC R&D Center continues to develop new technologies for
removing wrinkles from the skin. In 2009, we completed development of an improved anti-wrinkle cream formula. At
the heart of this technology are micelle particles, which act as the nutrients and active ingredients, linked to polymers
to create a three-dimensional network. Such a structure fills in the wrinkle lines and conceals them. Importantly, the
network structure thickly covers the wrinkle traces, creating an occlusive effect that maximizes the skin's absorption
of the active ingredients that remove wrinkles. Clinical tests have proven the efficacy of this wrinkle-lifting technology.
Light wrinkles around the eyes were reduced by 12.7 percent within just four weeks, while 13 percent of the heavy
wrinkles in the neck were gone after eight weeks of use. The new technology is being applied in Sulwhasoo Extra
Refining Eye Cream and Sulwhasoo Restoring Neck Cream.
New Skin-regenerating Substance Developed with Non-Sterilized Natural Fermentation We developed a natural,
non-sterilized fermentation method, traditionally employed in Korea for preserving food. This technique was then
applied to develop a way to create substances that promote skin regeneration and whitening. Our R&D achievement
was received the Award of Excellence (Health, Welfare & Family Affairs Minister's Prize) at the 2009 Healthcare Industry
Technology Awards. Natural fermentation methods, though recognized for the benefit of their low-carbon footprint,
have had limited commercial application until now. However, researchers at the AMOREPACIFIC R&D Center saw
potential in the Korean way of making kimchi and fermented seafood dishes that remain preserved for a long time
without being boiled or sterilized in some other way. They have succeeded in honing the technique with scientific
methodology and applying it to ingredients used in Oriental medicine. The result is Jang Yang YuBaekDan, a new
substance with improved efficacy that is now being used in whitening line of the "Hannule", cosmetics brand based on
the principles of Oriental medicine.
Awards & Designations
Awards & Designations Technology Name
Genetic modification to accelerate energy metabolism with respect to soy isoflavone compounds
Application of traditional Korean methods for making soy sauce and soybean paste to develop natural fermentation methods that require no Pasteurization, and new materials whitening and regenerating the skin
World's first rare ginsenoside derivatives for slowing the aging of skin
Technology for reducing skin irritation from hair dye, a skin diagnosis and counseling system using multifunctional sensors
IR52 Chang Young-sil Award (Ministry of Education, Science & Technology) Sep. 2009
Excellence Prize at Health Industry Technology Awards (Ministry for Health, Welfare & Family Affairs) Dec. 2009
Prime Minister's Prize at 2009 Korea Technology Awards (Ministry of Knowledge Economy) Dec. 2009
Health Technology (HT) certification (Ministry for Health, Welfare & Family Affairs) Dec. 2009
R&D Innovation
41
Innovative Products
Water Plus & Brain Plus In April 2009, we released Water Plus, the "liquid that lightens the body," under the Sulloc
brand. Water Plus is a powdered supplement that contains a high concentration of catechin, a substance that is found
in green tea. Catechin is effective in burning body fat and has a highly antioxidative effect. One packet of Water Plus
contains 180mg of catechin and an Oxygen Radical Absorbance Capacity (ORAC) of 6,750.* Thus the antioxidative effect
of one Water Plus packet is the same as eating 12 tomatoes or 25 blueberries.**
Brain Plus contains a high concentration of theanaine, an amino acid derivative commonly found in green tea. Theanaine
is known to help people focus and concentrate, improves memory and helps protect the nerve cells in the brain. One
packet of Brain Plus contains 50mg of theanaine, about 190 times the amount found in a cup of Sulloc Korean Green tea
with brown rice.
Yeginseng Ginseng BerryTM Extract AMOREPACIFIC has launched Yeginseng Ginseng BerryTM Extract, a new red
ginseng product, under the V=B Program brand. This product features the optimal blend of red ginseng roots, processed
with a patented compressing technology to acquire the highest grade (Natural Grade) of red ginseng, and ginseng
berries. AMOREPACIFIC's standardization know-how has resulted in a premium-quality ginseng product. Ginseng
berries are a particularly precious commodity. The ginseng plant produces berries only once (in its 4th year) in the entire
lifecycle, and the berries are only harvestable during one week in July. Moreover, they are difficult to store for a long time.
The berries contain more than twice as much saponin as the roots do and they are rich in bioactive regulators. Work by
the AMOREPACIFIC research team has refocused attention on their health-promoting benefits.
*J. Agric. Food Chem. 2006, 54, 1599-1603**Oxygen Radical Absorbance Capacity(ORAC) of selected foods. (Based on a 2007 USDA report)
Global Connect & Development While continuously improving in-house technology capabilities, the AMOREPACIFIC
R&D Center is acquiring industry-leading technological prowess through the ongoing C&D program with prominent
researchers around the world. One noteworthy result of this effort has been ABcell, a commercialized cosmetic
ingredient that uses a skin cell mimetic developed in a 3-year project with Harvard University Physics Professor David
Weitz and his work in Microfluidics. ABcell acts like skin cells that inhibit aging by wrapping a thin membrane similar
to cellular tissue around the growth factor which controls melanin and collagen production, the two leading factors
in the skin aging process. We have also worked with Professor Jerome Bibette, a specialist in nano-emulsions at ESPCI
University in France. Our joint research efforts in Europe are being accelerated by our participation in the establishment
of Capsum, which applies state-of-the-art biological and medical technologies in the development of cosmetics.
Sulloc Water Plus Yeginseng Ginseng BerryTM Extract
* Details on establishment of our environmental management system up to the global standards can be found on page 76
** Details on our environment-friendly products can be found on Page 34.
AMOREPACIFIC Green Movement
Environment-friendly
Product
Development**
Green
Communication
Minimizing
Environmental Impact
Companywide
We celebrated our 48th anniversary in 1993, and marked that occasion by publicly
proclaiming our commitment to unreserved responsibility for protecting the environment
and providing top quality products and services. The "AMOREPACIFIC Green Movement" was
launched to put those words into action in a coordinated fashion. On our 54th anniversary,
in September 1999, we established new environmental directives and targets, based on our
managerial philosophy that makes environmental protection a top priority. Since then, our
environmental management program has been implemented with ever-increasing intensity.
As a result, we have managed to bring our corporate activities in greater balance with the
environment, fulfilling our customers' expectations of us as a responsible corporate citizen.
Our Environment
Environmental Management
System Up to the
Global Standard*
4�
Strategic Directions for GHG Reduction
Reduce GHG generated directly by production and transportation operations
Reduce the GHG emitted during the operation of buildings, including the R&D center, Head Office and other regional offices
Develop products with low carbon content to cut GHG emissions in the overall product lifecycle
CO2 Emission Volume
2007 2008 2009 Target 2009 Result 2010 Target
Emission volume (tons of CO2) 23,796 24,010 23,951
Basic unit (tons of CO2/KRW100 million in sales) 1.754 1.568 1.490 1.354 1.318
Lower GHG from Production &
Transportation
Lower GHG from Other
Support activities
Lower GHG from
Products
Note: Carbon dioxide emissions are calculated according to the IPCC 1996 guidelines. The figures include part of the CO2 that is emitted by other companies that are leasing space at AMOREPACIFIC worksites. The electricity emission factor is 0.424t-CO2/Mwh(Korea Energy Economics Institute). The GHG emission figures are subject to change according to future boundary conditions and the emission factor.
GHG Reduction Activities We calculate our GHG footprint from two major sources. The first (Scope 1) is the direct
emissions from the combustion of fuel (LNG, diesel) during transportation and production. The second (Scope 2) is
indirect emissions, emitted during the generation of the electricity used by the heating and air conditioning systems
and computing equipment in our head office, regional offices; and directly run shops. "Scope 3" refers to GHG emission
from rented office space and is not included in the AMOREPACIFIC GHG inventory. We carried out the Companywide
GHG Reduction 3, 4, 5 Project as part of our 2009 Sustainability Management Action Plan. The numbers refer to the
three GHG reduction strategies four principles for GHG reduction, and a five percent GHG reduction target for the year. A
Cross-functional Team on Climate Change was formed, and they pinpointed 94 GHG reduction projects to be carried out
in 2009. As a result, the basic unit (the ratio of emissions to sales) was reduced 13.6 percent from the 2008 figure.
Our production operations generate 48 percent of the GHG emissions companywide. We lowered the GHG emissions
from our factories by improving the automatic timing and temperature controls on our boilers at night. In the process,
LNG consumption fell 30 percent year on year at these worksites. We also improved the facility cooling systems, which
are not directly related to production. The coolant which was previously supplied through conventional chiller units, was
run through idle cooling towers, reducing both our electricity consumption and our carbon footprint.
Our effort to reduce GHG emission in support activities included the plan to increase the condensate water recovery rate
of our boilers at the R&D Center through a Six Sigma project. This project was conducted as an energy reduction activity.
Meanwhile, the duration of the companywide "Cool AP Campaign" was extended from two months (July and August) to
four months (June through September), helping to minimize the energy consumed for cooling the office space.
The Korean government's Basic Law on Low Carbon and Green Growth went into effect in January 2010, and companies'
response to climate change is coming all the more important and urgent. AMOREPACIFIC does not generate much
greenhouse gas (GHG), but is responding aggressively to climate change by making low-carbon consumer products. Our
efforts to reduce GHG emissions follow three strategic directions: (1) lower GHG from production and transportation, (2)
lower GHG from other support activities, and (3) lower GHG from products.
Our Response to Climate Change
44
Comparison of Carbon Footprint for Mise-en-scene Pearl Shining Moisturizing Shampoo (780g)
3,605g CO2 generated
Usage about 81.2% of total
Including Usage StageNot Including Usage Stage
677g CO2 generated
Packaging about 48% of total
Training for Climate Change Specialists The AP Leadership Course in Climate Change Mitigation was launched in
2009 to implement climate change response activities systematically and in a way that best suits AMOREPACIFIC. A
total of 20 people completed the program, which imparts basic knowledge on the subject, teaches how to build GHG
inventories, explains the importance of low-carbon product manufacture and its direction going forward, and presents
the company's goals and core activities regarding climate change response. The trainees received the foundation for
being developed into experts on climate change issues.
Cool AP Campaign We launched the "Cool AP" campaign to help us reach our GHG reduction goal and change the
work environment and employee energy-use habits. The male employees were allowed to dispense with their ties during
the campaign period, and the interior temperature of our offices was maintained at 26-28℃ to cut energy consumption.
Research on CO2 Absorption by Tea Bushes AMOREPACIFIC began cultivating tea on Jeju Island and at Gangjin,
Jeolla Province in 1980. Currently 5.3 million tea bushes on some 175 hectares of tea fields are absorbing considerable
amounts of carbon dioxide from the air. We wanted to know just how much of a contribution they are making to GHG
reduction, so we conducted a survey in cooperation with a team under Professor Koh Seok-chan from the Department
of Life Sciences at Jeju University between August and November 2009. An excavator was used to dig sample plants out
by the roots to measure their dry weight. Those data were used to calculate the amount of CO2 absorbed by each plant
according to its individual age. The results show that the plantations have collectively sequestered more than 51,000
tons of carbon dioxide since 1980 and that they now absorb an additional 9,000 tons or so each year. Moreover, tea
bushes are more action in photosynthesis than tangerine trees or other members of the Theaceae family, indicating that
they also absorb greater quantities of carbon dioxide.
GHG Emission Volumes for Shampoo Disclosed AMOREPACIFIC has been taking part in the Korean Ministry of
Environment's carbon labeling system since its test launch in 2008. The program, which requires the volume of GHG
emitted during each product process to be disclosed on the package, went into full effect in 2009. Five Mise-en-scene
shampoo products and three Happy Bath cleanser products were certified by the carbon labeling program during
the year. For Mise-en-scene Pearl Shining Moisturizing Shampoo, 48 percent of all GHG emissions occured during the
packaging production stage. AMOREPACIFIC decided to improve this performance by launching a two-year Support
Project for Building Low-carbon Management Systems at Suppliers, starting in June 2009. We are now helping suppliers
assess their energy use and create GHG inventories, which will contribute to steady reductions in GHG emissions. In
addition, recycled plastic and lightweight designs will be increasingly used to lower GHG emission volumes. The
government's carbon labeling certification does not calculate GHGs that are emitted when the products are being used.
However, shampoos and other wash-off type products actually account for great volumes of GHG emissions during
use, and AMOREPACIFIC has decided to calculate the figures. In-house research shows that approximately 81 percent
of the total GHG emissions are related to the usage stage for such products. Therefore, greater effort will be focused on
lowering these quantities in the future.
45
Environment-friendly Production & Transportation
Reduced Energy Use The Mass Cosmetics Division's production site replaced the manual steam valve on the main
heater, which supplies steam from the boiler, with an electric valve that closes automatically on a timer. The amount to
steam loss was reduced, saving an estimated 66,000Nm3 of energy per year.
The Skin Care Division's production site had a steam heating system that was operated manually by workers to prevent
pipes in the old building from bursting on cold winter days. The potential for energy waste was high, so a new system
was built that would automatically adjust the steam supply according to the outside temperature. New monitoring
and alarm systems were also installed to prevent accidents. These improvements lowered a monthly average LNG
consumption by some 22,000Nm3 during the winter (December through March). The interior temperature at Makeup
Division factories was maintained at 26-28℃ during the summer of 2009. An energy use monitoring & assessment
system was operated at each factory, and over a four month period, overall power consumption was lowered by
42,000Kw, saving the company some KRW 7 million.
Reduced Water Use The Skin Care Division mapped all the places where water is being used on factory sites,
pinpointed the users, and installed additional flow meters to achieve a water consumption monitoring rate of 90 percent.
In addition, flow regulator valves were installed on the lines that supply cooling water to the production tank vacuum
pumps and homo mixer mechanical seal. As a result, water was supplied in the right amounts only at the time it was
needed, saving an estimated 9,998 tons of water, worth some KRW 35 million, per year.
Green Starter Program A "green starter" automatically shuts off the truck engine after a preset period of idling such
as waiting at a traffic signal. They were installed on two trucks in a pilot program that began in 2008. 126 more delivery
and transport trucks were outfitted with the new system by July 2009. So, the trucks registered 9.2 percent better fuel
efficiency. As a result, the program lowers the company's total GHG emissions.
Fuel Conversion and Larger Transport Trucks In 2009, we converted one delivery truck over from diesel to LPG, and
its NOx and CO emissions were reduced by 98 percent and 74 percent, respectively. In addition, the two 11-ton trucks
making transport runs between the Gimcheon and Busan Distribution Centers were replaced by a single truck with
trailer starting in February 2009. This change saved about 62 liters of fuel a day, lowering CO2 emissions by 32.3 tons for
the year.
Minimizing Environmental Impact Companywide
4�
Production
Recycling company
CustomerDistribution Sales shop
After delivery, the truck picks up empty containers that have been sorted by material type.
Empty Bottle
Glass
Plastic
The containers turned in by customers are separated into glass or plastic and carried away by the company delivery truck.
After the contents have been used, customers are asked to return the containers to the sales shop.
Product
Empty Bottle
ProductProduct
Innisfree Green Campaign
Innisfree Green Us In 2009, Innisfree launched the "Green Us" event to attract enthusiastic university student marketers
who can support and perpetuate the promotion of both the products and people and environment-friendly brand
image. A total of 60 students were mobilized throughout 2009. In November, 30 Green Us marketers joined a campaign
to clean up litter on the streets of Seoul's Myeongdong district. They also gave impromptu performances on lifestyles
according to the Green Rules.
"Green Life" White Paper In 2009, Innisfree published a white paper on seven easy-to-follow rules for leading an eco-
friendly lifestyle. The report was distributed through Innisfree shops, and customers were encouraged to take part in
environment protection activities.
Empty Container Recycling Starting in August 2009, 260 Innisfree shops around the country took part in a drive to
collect empty cosmetics containers. The purpose was to urge customers to recycle voluntarily and join an environmental
protection campaign. Those who participated were awarded 1,000 Beauty Points. The campaign collected 3,870kg of
glass and plastic containers during 2009.
Carbon Cashbag System
AMOREPACIFIC is encouraging low-carbon consumption habits in response to global warming. A campaign was
launched from August 2009 that provides Beauty Points and Carbon Cashbag Points to customers who purchase Mis-
en-scene shampoo refills. The Carbon Cashbag Points are collected by using the coupon printed on the back of the refill
product package. Ten percent of value of the accumulated Carbon Cashbag points is donated to programs designed to
reduce the carbon footprint.
Green Communication
4�
"AMOREPACIFIC's climate change response activities are
multifaceted. The company is not only managing the carbon
footprint of production processes but also working to reduce
GHG emissions from product transport. Of course, a dedicated
effort is being made to develop environment-friendly products.
Going forward, I hope AMOREPACIFIC will continue to find ways
to reduce energy consumption and GHG emissions. Amorepacific
will need to adopt a more systematic approach to their activities
to raise energy efficiency, and therefore, they should establish
Building Energy Management Systems (BEMS) and acquire
certifications in Leadership in Energy and Environmental Design
(LEED) and other green building rating programs.
In the future, I hope AMOREPACIFIC will conduct environmental
management activities closely with the customers. In-house
Innisfree and Aritaum shops can be the venue for climate change
response in cooperation with customers. I believe significant
results are attainable by (1) managing the environmental impact
of product manufacture and transport as well as delivery to
customers, and (2) minimizing consumers' GHG emissions when
using the product and disposing of empty containers. In the
future, the responsibility for GHG reduction will spread from the
corporate makers to the individual users. Therefore, activities
with customers to respond to global warming will provide both
environmental improvements and economic incentives.
Interview with Eun Jong-hwan, CEO of ECOSIAN
Empty Container Recycling Campaign 2009 Low Carbon Green Growth EXPOCarbon Cashbag Products
Participation in 2009 Low Carbon Green Growth EXPO
AMOREPACIFIC participated for the first time in the Low Carbon Green Growth EXPO, held in October 2009. The company
displayed green tea certified as environment-friendly agricultural products, Innisfree products certified by Ecocert,
Happy Bath body cleaners bearing the Korea Eco-Label, LOHAS-certified Song Yeom Toothpaste, and Mis-en-scene
shampoos with the Carbon Footprint Label.
48
177,023
154,577172,862
3.224 3.4873.169 3.103
3.364 (Target)
3,661
2,619
3,209
Energy Consumption by Year
0.111
248,365240,092249,337
5.007 4.9114.553 4.407
7,092 6,996
6,080
0.1480.138
0.110
2007 2008 2009 2007 2008 2009 2010 (Target)
0.127 (Target)
4.544 (Target)
Energy (toe) / Basic Unit (toe/tons of product)
2010 (Target)
Note: These firgures include part of the energy used at leased facilities.
Water Consumption by Year
Water (tons) / Basic unit (tons/tons of product)
20082007 2009 2007 2008 2009
0.055 0.063 0.067
Wastewater (tons) / Basic unit (tons/tons of product)
2010 (Target)
Wastewater Generation by Year COD Generation by Year
COD amount (kg)/ Basic unit (kg/tons of product)
Globalized Environmental Management
AMOREPACIFIC conducted an environmental audit at the Shanghai factory in 2009, analyzing the current status in
five major categories: Energy, Water, GHG, Solid Waste and Recycling. A report was issued detailing the areas that
need improvement. This prompted the company to upgrade the wastewater treatment facilities, improve efficiency in
wastewater treatment, and strengthen the monitoring of pollution-causing substances. As a result, the operations were
brought in strict compliance with the law, and also the volume of pollutants released into the environment was lowered.
In addition, we appointed a person to take charge of environmental performance, and we initiated domestic training
and OJT programs. The collection and analysis of key environmental data from the Shanghai operation began in the
second half of 2009, and will be disclosed to the public in the Sustainability Report in the future.
Environmental Performance Results
The environmental performance results are for the four factories operating in Korea.
49
Solid Waste Recycled by Year
2,377
1,331 1,446
35.329.7
56.5
58.73,774
4,875
4,206
0.079
0.096
0.077 0.075
2007 2008 2009 2007 20082010 (Target) 2009 2010 (Target)
0.085 (Target)
52.4(Target)
Dust Generation by Year Purchase of Eco-friendly Supplies by Year
1,895
178
7622,312
1,959 1,904
0.048 0.039 0.035
2007 2008 2009 2007 2008 2009
Dust (kg) / Basic unit (kg/tons of products)
Analysis of Environmental Performance Results
MPI(Management Performance Indicator)
OPI(Operational Performance Indicator)
335
455
790
404
364
768
508
365
873
2007 2008 2009
528
360
888
2010 (Target)
Solid Waste Generation by Year
Waste(tons) / Basic unit (tons/tons of product) Recycling amount(tons) / Recycling rate(%)
Amount for Eco-Label & GR Mark items (KRW in millions)
Employees
A Pleasant & Healthy Workplace
Practice female-friendly policies Maintain employee diversity
and refrain from discrimination Perform employee safety management activities
Compensation & Fringe Benefits
Determine pay on the basis of performance
Give employees a choice of fringe benefits
Open Communication
Diversify communication
channels
Maintain win-win labor-
management relations
Employee Capability
Development
Develop tailored
competencies
Develop global manpower
The AMOREPACIFIC human resources management strategy is implemented in four
directions: employee capability development, a pleasant and healthy workplace, open
communication, and performance-based compensation & fringe benefits. At the same time,
our personnel policy is diverse and flexible with respect to individual employees,
organizational units and job functions. Our priority is put on employee capabilities, and our
people are encouraged to cultivate specialized competencies related to their own jobs,
helping develop a personal career vision. The AMOREPACIFIC mission is to help customers
realize their dreams for health and beauty. To this end we develop well-rounded employees
who embrace our five core values (Openness, Innovation, Proximity, Sincerity and Challenge)
Our Employees
51
Vision
Cultivate competitive,
globally-competent
employees
Mission
Provide global
HRD
solutions
Mid-/long-term HRD Strategy
Establish a corporate culture that shares core values
Cultivate professionals who generate results
Establish a tradition of constant, voluntary learning driven
by employee initiative
Individualized Skills Development
Each year, individual development plans (IDPs) are used to evaluate work skill levels and identify the competencies
that need to be developed. Individual training schedules are designed accordingly. The Learning & Development (L&D)
Center provides information on available training and serves as the channel for employees to acquire the skills they
need. A Learning Points program is also in effect to encourage employees to take the initiative in their own career
development. Employees are free to select courses that suit their job requirements and career objectives, and the
training is provided via the L&D Center as e-learning, the Reading School and intensive programs. In March 2010 the L&D
Center services were upgraded with the adoption of the "training shopping mall" approach, making training contents
more easily accessible to all employees.
In addition, we continue to formulate new training solutions and devise training courses to ensure the system meets
the needs of each sales channel and develops specialists for each point in the value chain. One program identifies and
disseminates best sales practices, helping to cultivate performance-oriented professionals in the field. Sales people
are also provided with the opportunity to become beauty specialists through training courses in makeup, aesthetics,
sales and services, and individual job positions such as Beauty Master come with specific qualifications. As such,
AMOREPACIFIC has gained a reputation as Korea's foremost beauty academy.
HRD Strategy
Our HRD Centers at Yong-in and Daejeon are at the center of our effort to cultivate globally-competent personnel who
are creative, love challenges, and are responsible. These training facilities are on a mission to develop the kind of people
that will ensure the global competitiveness of AMOREPACIFIC. They provide HRD solutions that effectively support
individual career development and corporate growth as well as improve work skills.
Developing Employee Capability
52
Job Training Hours & Expenditures by Year
2007 2008 2009
Total Training Hours 220,333 232,016 328,553
Training Hours per Employee 66.8 65.2 89.7
Total Training Expenditure (KRW in millions) 4,932 5,024 5,697
Training Expenditure per Employee (KRW in millions) 1.50 1.41 1.55
Note: The training hour figures for 2007 and 2008 were adjusted to reflect changes made in the employee training system in 2009.
Global Training System
Glo
bal B
iz In
tens
ive
Sr. specialist
Specialist
Staff
Manager
Global LeaderCourse
Global ExpertCourse
Global Trainee Course
Leader Nurturing (For Selected Trainees)
Chinese
Programs at Chinese Subsidiary
Chinese Business Course
Negotiation Skills
Presentation Skills
Document Writing skills
Glo
bal B
iz B
asic
Leadership Development (Compulsory/Elective)
English
ProfessionalCaring-Proposal
ProfessionalCaring-Speech
Global Professional
Global Foundation
ELE Test
Systematic Training of Globally-competent Personnel
The AMOREPACIFIC system for training future leaders is based on leadership competencies, enabling us to identify
individuals with outstanding capability early and train them in stages. The development of leadership skills is maximized
through intensive preparatory courses prior to promotion, followed by practical training afterwards. We also search out
substantial business issues such as creative management approaches and sustainability management to use as training
themes with top management. The latest contents are regularly shared with top management to provide them with
insights on business management.
We are nurturing capable employees to lead the global operations and have bolstered our support functions, including
that of the global L&D Center, for improving global business performance. The work skills of our overseas employees
are being strengthened as well, starting in China. There, we have developed a series of programs for the locally-hired
employees, including courses for specific positions such as a leadership course for managers, a sales management course
for regional managers, and a course for building worker solidarity. These programs will be expanded to our operations in
other countries as well.
53
No. of Employees on Domestic Maternity & Childcare Leave
2007 2008 2009
Maternity Leave (No.) 154 168 164
Childcare Leave (No.) 28 53 93
Domestic
3,663
Americas
52
Rest of Asia
168
Europe
223
China
1,857
Total
5,963
Percentage of Female Employee by Job Description(%)
2007 20092008
58.5
Total Percentage of Female Employees
Management
Note: Excluded 21 females as non-executive directors, advisors and labor union officials (Domestic)
Note: As of the end December 2009
59.7
62.1
65.467.3
69.3
9.112.4
14.4
No. of Employees by region
staff
Worker Diversity with No Discrimination
The global AMOREPACIFIC workforce numbered 5,963 persons (3,663 domestic and 2,300 overseas) as of the end of
December 2009. In Korea the gender ratio is 38 percent men and 62 percent women, and disabled persons made up
0.3 percent of the total at the end of 2009. Overseas, locally-hired persons are the majority in all ranks, including top
management. Standard No. 4 in the Code of Ethics stipulates that all workers be provided the same opportunities based
on individual capability and qualification. All employees are to be judged fairly for work performance and compensated
accordingly. Gender, region, academic background, physical disabilities and nationality may not be used as reasons to
discriminate against any employee in terms of hiring, work assignment or promotion. We adhere strictly to the rules of
employment, collective bargaining agreement, and Labor Law, and will not allow the hiring of children or forced labor.
A Pleasant & Healthy Workplace
Establishing a Female-friendly Corporate Culture
Our female employees are provided with training programs to develop their leadership capabilities and job skills,
helping them develop their careers. We also offer them a variety of attractive fringe benefits in line with our corporate
culture, which treats women with the utmost respect.
We operate childcare facilities at the Head Office and three value centers to ease the burden of working mothers and
enable them to concentrate on their work. 9 exclusive lounges for female workers have also been installed at the
Head Office, all four value centers, and four regional offices. The lounges are equipped with breast pumps, baby bottle
sterilizers and other facilities to help breastfeeding mothers take care of their infants while at work. A nurse is on staff at
the head office to provide workers with physical checkups and healthcare advice.
54
Accidents per Year
2007 2008 2009
Accident frequency rate(%)* 0.09 0.14 0.14
Accident occurrence rate(%)** 0.42 0.65 0.66
* "Accident frequency rate" refers to the number of industrial accidents that occur per year among all the employees in the company.
** "Accident occurrence rate" refers to the number of accidents per 1 million hours of labor performed.
Work Life Coaching Program
In 2009, a new employee assistance program called "Work Life Coaching" was adopted to help employees cope with
the various problems and stress that they may encounter on and off the job. A professional counseling agency has been
hired to offer advice to employees and their family members in face-to-face interviews, by email or over the phone. The
confidentiality of personal information is strictly maintained at all times.
A Pleasant Workplace
AMOREPACIFIC has run a campaign called "making a pleasant workplace for both labor and management" since
2004, encouraging everyone to work together to make the workplace more enjoyable. The campaign stresses two
major themes: "Open and Healthy Corporate Culture." Every year, labor and management jointly form the annual "Fun
Workplace" among different organizational units.
Improved Safety Management Activities
The Labor-Management Cooperation Meetings and Industrial Health & Safety Committee (decision-making body) are
instituted at each worksite to ensure employees have a safe and pleasant workplace and to enhance their quality of
life. The Korea Standards Association has granted K-OHSMS 18001 certification to the health and safety management
systems at the Skin Care Value Center (in 2002) and Mass Cosmetics Value Center (in 2004). All four domestic value
centers are closely monitored for accident frequency, compliance with worker health and safety laws, and incidence
of occupational illness. Separate safety management processes were established in 2009 among the Head Office and
regional sales offices to prevent accidents more effectively. In 2009, five employees suffered injuries during the year,
giving the company an accident rate of 0.14 percent. Not a single case of industrial illness occurred during the year at
AMOREPACIC.
Employee Health Promotion Program
AMOREPACIFIC enrolled in a group insurance plan in 2003, helping to cover employees' medical expenses in the event
of illness up to KRW20 million for cases that require hospitalization. Starting in 2007, the health examination program
was expanded, requiring all male employees 35 years or older and all female employees at least 30 years of age to have
complete physical examinations, including tests for cancer. More thorough follow-up measures are being planned,
to include maintaining records of the checkup results and providing employees with information and guidance on
personal health management.
AMOREPACIFIC also operates fitness centers at six different worksites. Employee use of these fitness centers is climbing
steadily with ongoing improvements to the facilities and the organization of special events. In addition, "the Diet and No
Smoking Clubs" help to raise employee awareness of health issues.
55
Annual Employee Engagement Level Survey Results
Index 2007 2008 2009
Employee engagement level rate (%) 73.8 81.0 82.0
Employee participation rate (%) 59.8 61.2 57.5
Note: Until 2007, AMOREPACIFIC surveyed employee satisfaction, while the focus was shifted to employee engagement in 2008. Therefore, the questions and survey approach were changed in accordance.
An Employee Engagement Survey: ABC Talk
For years, AMOREPACIFIC conducted an annual employee satisfaction survey to collect various opinions and reflect them
in management decisions. In 2008, the survey was changed to measure the degree to which employees are physically,
cognitively, and emotionally engaged at work. The new survey has 79 questions regarding six categories (balance
between work and life, colleagues, management directives, duties, opportunities, and compensation) that affect
engagement rates.
The employee engagement level survey was conducted in October 2009, and the results indicated that AMOREPACIFIC
employees are 82 percent engaged, higher than the Korea National Norm (72%) and Global Manufacturing Companies'
Norm (81%). However, the figure is still lower than that for the Global High Performance Companies' Norm (89%). The
survey showed that the three main factors affecting employee engagement level are corporate image, leadership, and
supervision. We also determined that leadership, diversity, compensation and performance evaluation are the areas
that need immediate improvement. A list of priorities for corrective action was established on the basis of the analyzed
survey results, and workshops were held to establish action plans for each business division. Follow-up activities are
ongoing. The employee engagement survey was conducted for the first time at the Chinese subsidiary in 2009. The
opinions of locally-hired employees are now being gathered routinely to be used as primary materials for establishing a
personnel system that is tailored for local requirements.
Open Communication
Internal Communication
AMOREPACIFIC continues to diversify intra-organizational communication channels to improve dialogue. The Korean-
language company magazine went online (sabo.amorepacific.com) in March 2000, and the 118th edition of the online
publication was issued in December 2009. In January 2008 the bimonthly webzine (global.amorepacific.com) was
inaugurated for employees worldwide, promoting shared values and growth as one organization. In-house broadcasting
system is on the air at Korean worksites every morning and during lunch break, while the monthly CEO's Newsletter is
published in five languages (Korean, English, Chinese, Japanese and French), to explain top management's policy and
directives to all employees.
We have expanded the target audience for our in-house communication so that we may convey our values and mission
to more people. For example, a new newsletter called "For a More Beautiful World" is now distributed to the Beauty
Partners (Arielle, Angel, Genie, and Flora) in each distribution channel, who serve as the direct point of customer contact.
The publication is designed to boost morale and foster a spirit of belonging to the AMOREPACIFIC organization. It covers
the latest news and CSR activities, interviews with top-performing employees and sales outlets, offers helpful sales tips,
and sends messages of encouragement to employees.
In addition, we conduct an annual survey to ascertain employee satisfaction with our internal communication channels,
and the feedback is used to either improve or discontinue current media as well as establish new lines of communication.
56
"Beauty Journey" Signing of labor-management cooperation agreement
Open Labor-management Relations Based on Mutual Benefit
Formal discussions between labor and management are organized at each worksite. Collective bargaining is used
to negotiate on behalf of all employees except executives. The delegations for each side can have 3 to 10 members,
but both delegations must have the same number of representatives present. Topics on the agenda include higher
productivity and performance categories; better fringe benefits for workers; settlement of worker grievances; improved
working environment regarding worker safety, health and other concerns; and worker health promotion programs. The
collective bargaining agreement requires that we reach an agreement with the labor union before we restructure current
operations or outsource any of our work.
We are committed to amicable labor relations at AMOREPACIFIC. Seminars on labor-management cooperation are held
to promote productive and cooperative ties. We have also established channels of communication between labor and
management as part of our Open Communication policy, and all operational information is shared with the employees.
Labor leaders and senior executives periodically sit down together for information talks, and the chief of the sales
division and the labor union leaders attend a "communication session" each quarter. In addition, our employees receive
performance incentives, and we cooperate with the labor union to develop various programs such as a productivity
enhancement campaign led by the labor union and community service activities organized jointly by labor and
management.
AMOREPACIFIC has been a model for win-win labor relations, and our efforts have been recognized outside the company.
We were designated as an "Outstanding Enterprise for Labor-Management Cooperation" in 1997 and "Equal Opportunity
Employer for Men and Women" in 2003. We received the Rewarding Workplace Grand Prize and were named an
"Enterprise for New Labor-Management Culture" in 2004. In 2009, a new labor agreement was reached without going
through the lengthy bargaining process for the second straight year. We have remained free of labor disputes for each of
the past 18 years, a tribute to our win-win approach to labor relations.
57
Total Compensation Package
Work Environment
Office environment Leadership Balance between work & life
Salary
Basic pay Incentive pay
Fringe Benefits
National Pension Plan Medical insurance School expenses for children
Training & Development
Career development Performance management Training
Compensation Strategies & Plans
The optimized AMOREPACIFIC compensation package includes investment in HR development, pay, fringe benefits,
career development, and the working environment. This approach enables employees to become more engaged at work,
resulting in the cultivation and maintenance of outstanding employees.
Salaries, which are the monetary rewards, are divided into fixed basic pay and variable incentive pay. The basic pay
reflects individual contributions and motivates workers to increase the value of their work and role over the long term.
The incentive pay is based on the current financial performance of the company, division and team, and serves as a
short-term motivator. The AMOREPACIFIC compensation plan is designed to achieve balance among work positions,
while extra pay is provided according to performance results. We monitor the market constantly to ensure that our pay
package is highly competitive.
In addition to salaries, our employees can receive loans when purchasing a house or putting down a major rental deposit.
The company helps pay for children's schooling, operates childcare facilities at worksites, and gives employees regular
medical checkups. Employees can spend their vacations at resort facilities operated by the company, and our Refresh
Break Program provides employees with opportunities to get away from work to unwind.
Fringe Benefits
In addition to monetary rewards, AMOREPACIFIC adopted the elective fringe benefit program in September 2006 to
respond better to individual employee needs and improve the quality of their lives. The program originally divided
fringe benefits into four categories: self-development, medical & health support, schooling for children, and time off &
leisure. A fifth category, beauty & health, was added in 2009. We also conduct an employee satisfaction survey each year
and constantly benchmark other companies in order to make ongoing improvements to our own program.
Compensation & Fringe Benefits
Beauty Partners
Deliver services at the point of customer
contact
Offer training and education opportunities
to strengthen professional capabilities
Offer economic, environmental and
social support
SuppliersAMOREPACIFIC
AMOREPACIFIC maintains mutually beneficial ties with business partners in two major
classifications: (1) the companies that supply raw or packaging materials and (2) the "beauty
partners" who sell AMOREPACIFIC products directly to the customers. We recognize that
realizing our vision of becoming global top 10 cosmetics company would be impossible
if our suppliers lack global competitiveness. Therefore we implement various strategies to
help our suppliers in raising their global competitiveness and our Beauty Partners to grow
their businesses.
Our Business Partners
Provide raw and packaging
materials
59
Beauty Partners at AMOREPACIFIC (as of Dec. 2009)�
Business Areas Divisions Beauty Partners No. of Beauty Partners
Door-to-door businessDoor-to-door
LirikosAMORE Counselor
Beaurator35,445
2,070
Store businessAritaum
Discount storesInnisfree shops
ArielleGenie
Herbnia
1,201870237
MC&SMass Cosmetics
SullocFlora
Tearator1,161
181
Our beauty partners include the "AMORE Counselors" and "Beaurators" for door to door sales, "Arielle" beauty consultants
at the Aritaum franchise stores, and "Flora," "Genie" and "Tearator" sales representatives at large discount stores. We help
these beauty partners earn a steady income and grow their businesses so that they can realize their full potential. Our
partnerships with them are kept close so that we can cooperate in making society more beautiful & healthier.
AMORE Counselors
AMORE Counselors have been working with us for 46 years, and they numbered more than 35,000 as of December 2009.
These sales agents are committed to serving customers as lifetime beauty partners, and we help them to comprehend
and satisfy customer needs so that excellent relations are maintained. AMORE Counselors have more than 3 million
customers of their own and are responsible for more than one-third of our total cosmetics sales.
Improving Counselor Competencies�We developed and adopted the Sales Stimulation and Enhancement Program
(SSEP) in 2009 to improve Counselors' competencies and strengthen their sales capabilities, by providing the optimal
brands and services that can attract customers without the need for intensive sales promotion. The program will be
expanded steadily in 2010, the case study of the top 50 best practices will be published as well.
Community Service Activities with the Counselors�AMORE Counselors have been involved in various community
service programs mainly through their "Beautiful People" volunteer service club. For example, in 2009, the club held
the "Nanum (Sharing) Day" social contribution events twice and more than 220 Counselors have volunteered to work as
make-up artists for female cancer patients in the AMOREPACIFIC Make Up Your Life campaign. Their community service
activities are summarized and published in a report named "Beautiful Conduct" the same year.
Win-Win Relationships with "Beauty Partners"
60
No. of Counselors by Year
2007
30,9252009
35,4452008
32,400
AMORE Counselor AMOREPACIFIC Make Up Your Life campaign
Support for Counselor Activities�We have held annual conferences for Counselors since 2000 to thank them for their
hard work and to offer extra motivation. In 2009 occasion, the AMORE Counselor Way values code was announced in
commemoration of the tenth anniversary of the event. The code emphasizes four core values and they will serve as a
platform for further strengthening the relationship with the Counselors. We operate Counselor 080, an exclusive phone
number for filing complaints or seeking assistance. In addition, we continue to expand benefit programs and top-
performing agents are given grants to attend overseas training programs. In 2009, we supported the Counselors' sales
activities and helped them increase their income by taking several new measures. They include measures for facilitating
payment by credit card, integrating management for doubtful bills receivable, and decreasing rates for receivables
insurance.
Arielles
The "Arielle" beauty partners offer tailored beauty solutions. They have extensive experience with numerous
AMOREPACIFIC brands and work at the Aritaum shops, which provide beauty counseling services. With endless
enthusiasm for customers and beauty, the Arielles continue to learn and grow.
Arielle Training System�The SSEP for improving Arielle competencies began at full scale in 2009. A total of 305, out of
1,100, Arielle beauty consultants took the course and 143 of them who passed in-house tests received a government-
authorized certificate for counseling. In 2010, we plan another 300 are scheduled to attend the program. In addition, the
Arielle seminar was held in 2009, where about 1,000 participants took a competition to boast their "Definite 1M Skills"
and shared company visions there.
61
Counseling Master-qualified Arielles
Results in 2009 Accumulated target for 2010
No. of Arielles certified Aquisition rate No. of Arielles certified Aquisition rate
143 12% 343 29%
Arielles, beauty counselors who work at Aritaum shops Genies, beauty counselors who work at discount stores
Strengthening Arielle's Social Position & Supporting for CSR Activities�We standardized the Arielle titles and uniforms
to improve their image as well as to bolster their stature. We also expanded the benefit package for them, helping to
improve their quality of life. Case studies of exemplary customer satisfaction are shared by our collecting impressive
stories at stores and recording them on video. Each quarter, we select one Arielle with the best customer satisfaction
record as an "Arielle CS Star"; eight beauty consultants have been so named as of the end of 2009. In late 2009, we
published a report called "Beautiful Dreams" with details of these CS best practices.
Moreover, Aritaum shops and Arielles remain close to the local community. For example, we have collaborated with the
advocacy group World Vision to forge ties between each shop and one needy child through the "One Beautiful Seed"
program. Currently 148 children are being assisted worldwide through the program.
Genies
"Genie" is a new title for sales representatives working at counters for AMOREPACIFIC products in discount stores.
We provided this appellation along with business cards, nameplate and sales promotional materials to raise their
social standing and self-esteem as beauty professionals. They are also eligible for the SSEP to increase professional
competencies. Moreover, we collect exemplary examples of customer satisfaction performed by the Genie consultants
and name a "Genie CS Star" each quarter. Various benefit programs are run so that they can harmonize their work and
personal lives.
In addition, we have selected best-performing Genies and entrusted them with managing counters since 2009 to give
them a career vision and motivation to be part of management. As of late 2009, 56 outlets are run under this program.
62
Junior
Position Structure and No. of Floras
Beginner
Senior
Master
�Staff
Manager
Position Structure in 2008 Position Structure in 2009
24060
Floras
Flora
"Flora" is the name for beauty professionals working at personal care product counters in discount store. In 2009, we
adopted new HR policies to strengthen the stature of the sales representatives as well as to raise their self-esteem. To this
end, we adopted the new title for them, developed the "Flora Mission" for them to perform, and created a Flora Code of
Conduct. The mission is detailed in a handbook that the sales representatives can easily refer to.
Floras work under a four-tiered structure (Beginner, Junior, Senior and Master), providing opportunities for promotion in
step with their capabilities. Reward and incentive schemes have been devised for each position.
Previously training for Floras was limited to product information and sales skills enhancement. Starting from 2009,
however, we adopted a series of training programs that suit Floras of different positions, enabling them to grow as
beauty professionals who deserve customer recognition. We reflect the needs of Floras in the programs by listening
to customer feedback regularly. Starting from 2011, we will select superior Master Floras to utilizing their extensive
experience and instruct other Floras. As such these Masters can serve as role models for other Floras.
63
Win-Win Relationship with Suppliers
Economic Aspect Environmental Aspect Social Aspect
Financial support for suppliers Support for innovations Evaluation and improvements
Support suppliers to establish carbon management system Support for legal compliance with
environmental and safety issues
Support for HR development Implement open communication
Economic Support
Financial Support for Suppliers�We have invested a total of KRW5.2 billion in helping suppliers to strengthen their
QCD (quality, cost and delivery) competencies from 2005 to 2009 so that they can secure the working capital they need.
Moreover, our policy has been to settle all payments to suppliers in cash within one month of delivery receipt since 2003.
Support for Innovation at Suppliers� In the early 1990s, AMOREPACIFIC developed infrastructure for innovative
production in response to changing consumer needs and market environments. This infrastructure is now being used to
help suppliers innovate their production stages. In 2009, we started regular quality monitoring of packaging materials
provided by seven suppliers to bolster production management. By doing so, we were able to maintain a constant
quality level and reduced risk factors.
In 2008, we helped packaging material providers implement differentiated procurement system depending on their
grades. The program was expanded to cover another four suppliers in 2009. In addition, two mold suppliers received
support to bolster production and worksite management. For raw material suppliers, we are running various projects to
promote their innovation and operate a joint plant to diversify procurement sources.
Five suppliers were given comprehensive guidance for quality control in 2009. The guidance program thoroughly
reviewed the suppliers' production environment and facilities to identify problems and seek solutions such as measures
to prevent microbial contamination of products and improve quality.
Supplier Evaluation & Improvement AMOREPACIFIC measures the suppliers fairly by using the same yardstick on
both their QCD achieved through such innovative activities and their basic competencies. We award KRW 200 million
as prize money to our suppliers annually on the basis of those performance evaluations. Those funds, in turn, help raise
the morale of the employees at the suppliers and can be used to invest in new equipment for improving quality. Thus, a
virtuous cycle of improvement is maintained. In addition, we assess the capabilities of newly contracted suppliers before
initial transactions begin so that the new providers can discover and solve possible problems.
We have implemented a strategy for forging win-win relationship with raw material and packaging suppliers. The
strategy covers economic, environmental and social aspects, and comes with various support programs. In the future,
we will select, support and evaluate our suppliers not just on the basis of economic performance and compliance with
environmental laws but on social and environmental issues such as countermeasures against the climate change.
Win-Win Relationships with Suppliers
64
GHG Emissions from Suppliers Participating in SCCM Project (20 companies)
2007 2008 2009
Emissions (ton-CO2) 59,222 66,550 69,547
Scope of the Support for Carbon Management Systems
Processes Products Management Systems
Establish GHG inventory Diagnose worksite energy consumption structure
Estimate GHG reduction potential and set voluntary targets
Measure carbon footprints of ten products
Review Carbon management practices Set roadmap for Carbon management Develop Carbon management guideline Provide suppliers with education on
climate change countermeasures
Support for Environmental Protection
Help for Establishing Carbon Management Systems�We have implemented the government-sponsored Supply Chain
Carbon Management (SCCM) program, which is in force between June 2009 and May 2011. The program is designed
to reduce GHG emissions from the supply chain. During the first year, twelve packaging material suppliers, four raw
material providers, and four in-house and outsourced OEM companies are covered by the program. We have built a
platform to achieve constant GHG emissions reduction through the SCCM project, which will allow us to calculate
emissions from supplier companies. In addition, the program supports the establishment of the GHG inventory, which
will help suppliers handle legal issues associated with regulations climate change agreements stipulate. In addition,
we internally analyzed suppliers' awareness and activities for carbon management to identify individual supplier-
specific risk factors. This provides an opportunity for suppliers to correct their shortcomings. In 2010 we will ensure
these activities are conducted on schedule by setting roadmaps and guidelines customized for individual companies
depending on their situations.
Legal Support for Environmental & Safety Issues�We conduct annual on-site inspections at twenty-one packaging
material and seven raw material suppliers and provide them with technical guidance so that they comply with
environmental and safety laws. Thus, our suppliers can share the directives of AMOREPACIFIC for handling legal issues
amid a changing regulatory circumstances. In addition, our global pre-control systems for environment and safety
issues have become available to the suppliers so that they are capable of not only preventing environmental and safety
accidents but also managing to comply with domestic and overseas laws.
Social Support
Support for HRD at Suppliers�We understand that improving supplier competitiveness cannot be possible without
raising their own core personnel. However, supplier companies have relatively few training programs of their own. Thus,
we assist them by developing training courses customized for individual ranks in their organizations.
65
Apparatus for Communication with Suppliers
Apparatus Cycle and schedules Subjects
A-PAC/A-PRO General Meetings Twice a year (Feb. 27 and Jul. 28) Including raw and packaging material providersReview half-term results and share future strategic directions
A-PAC Operation Committee Meetings
More than twice a year (Apr. 28 and Oct. 7)
Including ten A-PAC membersShare innovation and discuss major issues related to suppliers
A-PAC Working Committee Meetings
When needed Including all packaging material suppliers' working-level peopleProvide education programs and share strategic directions
Working-level Win-win relationship Promotion Conference
May 16 Including raw and packaging material providers Facilitate communication and boost togetherness (116 attended)
Seminar on Win-win Practices for Supplier CEOs
Nov. 12-13 Including raw and packaging material providers Study innovation cases and make proposals
Supplier HRD Programs in 2009
Courses
A-PAC Leadership Cultivation Program
No. of trainees
18
Target trainees
Factory chiefs and production managers at A-PAC member companies
Period
For twelve weeksfrom Aug. 14
Objectives
Seminar on microbial contamination prevention process
Quality Control/Production Hands -on-Worker Cultivation
Developer Cultivation Program
Working-level education on ISO 9001 Certification
Understanding AP purchasing process
Education on GHS-MSDS
31Quality control managers at raw material suppliers and OEM/ODM companies
8Engineers at packaging suppliers developing resin products
22
27Relevant personnel in raw and packaging material suppliers
Packaging supplier personnel in charge of quality control / production management
24
Working-level staff in charge of production scheduling and sales
Jun. 5
Once a month starting from May (throughout the whole year)
Sept. 10-11Oct. 14-16
Dec. 22-23
Nov. 26
Dec. 1850Relevant personnel in raw material suppliers
Introduce to improved microbial contamination prevention process
Provide engineers at packaging material suppliers with advanced technology and theory on cosmetics package injection molding
Increase understanding of quality management systems and enhance system execution capability
Boost morale of supplier employees and provide education on business-related knowledge and know-how
Share information on packaging material purchasing process to respond well to unexpected events (including education using partners)
Support for legal compliance in relation with the transition from MSDS (Korean standard)to GHS (UN standard
Cultivate chief production managers capable of planning, directing and managing new product development, mass production, quality control and innovation activities
Open Communication with Suppliers�We have formed special committees to communicate regularly with our
suppliers for raw materials and packaging. The presidents of sixteen suppliers that provide raw materials belong to
A-PRO (for "AMOREPACIFIC Raw material Organization"), which holds a General Meeting and a Working Committee
Meeting regularly. Meanwhile, A-PAC ("AMOREPACIFIC Partners' Committee") consists of the CEOs of our 21 largest
packaging suppliers. The A-PAC General Meeting, Operations Committee Meetings and Working Committee Meetings
are held regularly as well.
AMOREPACIFIC
Employee-led CSR Beautiful Sharing Event
Beautiful Saturday Event Support for Employee
Volunteering
Foundations for the Public Welfare
Korea Breast Cancer Foundation AMOREPACIFIC Welfare
Foundation AMOREPACIFIC Academic &
Cultural Foundation
Culture-centered CSR Adopt-a-Cultural Asset
AMOREPACIFIC Museum of Art O'sulloc Tea Museum
CSR Programs for Women
Pink Ribbon Campaign AMOREPACIFIC Make Up Your
Life Campaign Hope Store Startup Fund AMOREPACIFIC Award for
Outstanding Women in the Science
Our social responsibility as a corporate citizen is fulfilled in many ways, with our primary
focus on activities that promote women's health and welfare. As a company, we sponsor
four main CSR programs that either improve the health and welfare of women, our main
customer base, or support cultural activities. Our employees are encouraged to participate
in volunteer community service; we operate our own non-profit charitable foundations, and
we participate in programs in cooperation with outside organizations. Our ultimate goal is
to help women lead healthier, more beautiful lives while enriching society as a whole.
Our Community
67
Annual CSR Expenditures
Year 2007 2008 2009
Expenditures (KRW in millions) 6,521 6,420 13,395
Percentage of Sales 0.5 0.4 0.8
Percentage of pre-tax profit 2.6 2.6 4.5
* The amount of expenditure for 2009 includes KRW5,954 million donated to promote community development in the city of Osan.
*
The slogan "Beautiful People, Better Tomorrow" reflects our determination to enrich society and make the world a
healthier and a more caring place. To this end we help women enjoy healthful beauty and we strive to harmonize people
and nature.
Major Programs in 2009
We strove to approach our CSR activities more systematically and transparently in 2009, engaging in programs that
are effective and distributing our resources as efficiently as possible. Our four major CSR programs for women were
developed further, while we increased our material and monetary assistance for employee volunteering. Our various
support systems were reinforced, enabling employees to engage in volunteer work more easily and enjoyably. We also
donated more materials and money to projects being carried out by three non-profit institutions as well as to projects
linked to other outside institutions. As a result, the effect of our overall CSR effort was greater than ever in 2009.
CSR Activities of AMOREPACIFIC
AMOREPACIFIC CSR Activities
68
Pink Ribbon Campaign Participants & Beneficiaries
Year 2007 2008 2009
Pink Ribbon Campaign 30,116 33,418 33,972
Preventative Checkups 2,270 4,037 4,964
Free Surgery Recipients 48 52 56
Pink Ribbon Campaign AMOREPACIFIC is engaged in multifaceted efforts to promote women's health and beauty. An
important example is the Korea Breast Cancer Foundation, which we founded in 2000. Our support for the operation
of the Foundation has been ongoing, and we have also organized the nationwide Pink Ribbon Campaign each year to
heighten public awareness of the disease and inform people about the necessity and importance of regular checkups.
The Pink Ribbon Marathon, the highlight of this campaign, has attracted an accumulative total of 142,293 participants
through 2009. All the proceeds from the event are donated to the Korea Breast Cancer Foundation, which pays for the
surgery needed by low-income breast cancer victims and educates the public on breast cancer prevention and early
treatment.
Also in 2009, Aritaum, the franchise shops that deliver "total beauty solutions," organized Aritaum Pink event, donating
10% of the sales revenue from product gift sets to the Korea Breast Cancer Foundation and handing out breast cancer
self-examination kits. In 2009 we also continued to sell Hera products in the Pink Ribbon Edition. This program donates
a percentage of the sales from these items to the Korea Breast Cancer Foundation, giving consumers a chance to put
a little more sharing in their everyday lives. AMORE Counselors invited customers to lectures on breast cancer and
women's health. The first annual Pink Ribbon Campaign Exhibition was also held to raise awareness of the disease
among university students and get more young people involved in the Pink Ribbon Campaign.
Pink Ribbon Marathon
CSR Activities Centered on Women
69
Make Up Your Life Campaign Participants
Year 2008 2009
Participating Cancer Victims 503 977
Participating Hospitals 18 30
Participating Counselor Volunteers 118 215
Hope Store Openings & Funding
Year 2007 2008 2009
Hope Stores Opened 14 13 16
Paid-in Amount (KRW in millions) 478 494 598
Support for Hope Store Startups�The Beautiful World Fund was established with money bestowed by AMOREPACIFIC
Founder Sung-Hwan Suh, and the Beautiful Foundation has been working with this Fund since 2003 to provide low-
income single mothers with unsecured loans to start up a Hope Store business of their own. This microcredit program
is designed to help these women achieve economic independence, and participants also receive professional advice on
running a business. A cumulative total of 54 Hope Stores have been established nationwide as of the end of 2009, and
the regional distribution of these businesses has continued to expand. In 2009, the cities of Gwangju and Daegu saw
their first Hope Stores open. The business owners pay back their loans to the Beautiful World Fund. Then, the money
is loaned out to other low-income single mothers in a virtuous cycle of sharing. Hope Store No. 9 completed its loan
repayment in 2009, and, the event was marked by donating 10% of the repayment to a designated shelter for women.
AMOREPACIFIC Award for Outstanding Women in the Science�We instituted the AMOREPACIFIC Award for
Outstanding women in the Science in 2005 to assist women's advancement and standing in the scientific community.
The Award helps to empower Korean female scientists, who face many difficulties, lead scientific progress. The Award
comes with a cash reward of KRW75 million, and 32 Korean female scientists have been selected as beneficiaries as of
December 2009. Meanwhile, we have also been nurturing the career development of female scientists. In 2008, our R&D
researchers began offering a career mentoring program to university students majoring in engineering or the science.
More than 60 female students were provided with an opportunity to take part in the program 2009.
AMOREPACIFIC Make Up Your Life Campaign�This program was launched in 2008 to help female breast cancer
patients overcome the profound feeling of loss as their physical appearance deteriorates during treatment. They are
provided with an opportunity to become more confident in their interactions with the world. A total of 503 women from
eighteen hospitals took part in the campaign during the first year, learning makeup techniques from 118 AMOREPACIFIC
Counselor volunteers. The target of the Make Up Your Life Campaign was expanded in 2009 beyond breast cancer
patients to include women suffering from any form of cancer. Moreover, the program was made available outside of
Seoul, at hospitals in Gyeonggi Province, Busan, Daegu, Daejeon, Gwangju and Cheongju. More than 1,000 women took
part at 30 different hospitals nationwide in 2009. They were served by 215 AMORE Counselors, almost twice as many
as during the first year. Samsung Medical Center worked with AMOREPACIFIC on an objective study to determine the
effectiveness of the program. According to the findings, the program was successful in helping the participants get over
the stress they felt concerning their physical appearance.
70
Employee Volunteer in 2009 & Time Spent
Program Beautiful Sharing Beautiful Saturday Adopt-a-Cultural Asset Total
No. of Volunteers 3,341 139 118 3,598
Total Time 13,301 725 944 14,970
* The figures for Beautiful Sharing cover events in both halves of the year.
*
Beautiful Saturday Employees donate second-hand items for sale at Beautiful Store outlets around the country. This
charity bazaar has been held annually since 2003, and AMOREPACIFIC employees have donated more than 100,000
items to the event to date. On November 28, 2009, we organized "Beautiful Saturday with AMOREPACIFIC" events at five
Beautiful Stores around the country. Over 13,000 items were donated, and 131 AMOREPACIFIC employees volunteered
to serve as store clerks for the day. A voluntary donation drive was launched one month before the event, encouraging
employees to get into the habit of recycling items they no longer need. The items were sold during the charity bazaar as
well as via an online auction, and all the proceeds went to the Beautiful Foundation.
Systematic Support for Employee Volunteering�� In 2008 AMOREPACIFIC launched the ABC Points Accumulation and
Matching Gift programs to encourage greater employee involvement in volunteer community service. This program
tracks each employee's volunteering activities and donations, and awards points accordingly. The amount of employee
involvement is reflected in the benefits employees receive. The points can be traded for training opportunities or fringe
benefits. The company will also match the amount that employees donate to charity, doubling the overall amount. The
Matching Gift program, which has been in place since 2006, encourages employees to give. The Matching Gift program
also extends to a payroll deduction campaign that AMOREPACIFIC employees have joined. The campaign deducts a
small amount from individual salaries, bonuses or incentive pay, and the collected funds are used to purchase special
gifts to help children at orphanages and needy families on holidays.
Beautiful Sharing Activities AMOREPACIFIC employees donate their time and talents at social welfare institutions
around the country during the Beautiful Sharing event that we organize twice a year. The company delivers material
support as part of the event activities. In 2009, more than 3,300 employees volunteered to help out at some 300
institutions, and more than 70 different AMOREPACIFIC personal care products, cosmetics and green tea products were
donated to some 950 institutions. The AMOREPACIFIC Talent Sharing program led the employees decide for themselves
where they will volunteer their time and particular skills, while AMOREPACIFIC paid the expenses for staging events,
transportation, insurance, and the material items required. In 2009, we bolstered our support mechanisms at the
company level as well. Fourteen people were chosen to act as Sharing Messengers, making it easier for employees to
participate in volunteer activities and making the volunteering experience more enjoyable.
Employee-led CSR
71
Inside the AMOREPACIFIC Museum of ArtInside the O'sulloc Tea Museum
Adopt-a-Cultural Asset In 2006 AMOREPACIFIC signed an agreement with the Cultural Heritage Administration of
Korea to maintain cultural assets as part of efforts to preserve Korea's culture of drinking green tea. Since then, we have
helped protect some of Korea's most important historical sites related to tea-drinking, including Dasancho-dang, Ilji-am,
and Chusa Yubaeji. During 2009, around 100 AMOREPACIFIC employees volunteered to go out to these sites each month
to do repairs on the ancient buildings, clean up the grounds and plant tea bushes. In 2008, we became the first in Korea's
private sector to design and produce environment-friendly signboards to explain the background and significance of
the cultural assets at Ilji-am, Dasancho-dang to visitors. The signage program was extended in 2009 to include the place
where Jeong-Hee Kim was exiled.
AMOREPACIFIC Museum of Art The AMOREPACIFIC Museum of Art started out in 1979 as the Amore Museum, Korea's
first to specialize in traditional cosmetics. Over the past three decades, this institution has gained great authority and
professionalism while heightening public interest in how Korean women lived in traditional times and the Korean
tradition of drinking tea. In 2009, the museum was repositioned as a place that can foster new culture that blends the
past with the present. Exchanges were also conducted with modern art museums around the world to provide visitors
with additional opportunities in discovering beauty in their daily lives. Today, the collection includes more than 9,000
items, and the museum is a favorite venue for researchers, writers and the general public to communicate with one
another. Research projects, special exhibits, classes and publishing activities by the museum are introducing Korean
beauty to the rest of the world.
O'sulloc Tea Museum This, the first of its kind in Korea, opened on Jeju Island in 2001 to help popularize green tea in
Korea. This institution displays to educate people today on the tea-drinking culture in traditional times. At the same time,
visitors get a chance to pick tea leaves and prepare the water for making green tea. The museum was renovated and a
new hall opened in 2009 as we celebrated the 30th anniversary of the AMOREPACIFIC tea plantation on Jeju. The tea
museum function was enhanced with the opening of a new gallery. The exhibit features a rare collection of traditional
tea-drinking vessels and utensils ranging from earthenware pieces from the Three Kingdoms Period (57BC-668AD) to
white porcelains from the Joseon kingdom (1392-1910). Other new attractions include opportunities to experience tea-
roasting and classes on the traditional tea ceremony. The number of visitors increased 40% from the previous year to
700,000, 30% of whom were from overseas. As such the O'sulloc Tea Museum will continue to play an important role in
promoting the premium value of Sulloc brand and the excellence of Korea's tea-drinking tradition.
Culture-centered CSR
72
Korea Breast Cancer Foundation We established Korea's first non-profit organization dedicated to fight against
breast cancer in 2000 to help promote women's health. The Foundation's Pink Ribbon Campaign, lectures on health
topics, financial support for surgery, preventative examinations, and support for academic research have raised public
awareness of the need to prevent and eradicate breast cancer. During the 2008 Pink Ribbon Campaign, 4,964 free breast
examinations were given, and over 7,000 people attended public lectures held at 53 hospitals around the country. The
Foundation also paid the medical expenses for surgery on 56 low-income women suffering from breast cancer, funded 9
academic research projects and worked with other organizations in a pilot project for providing mobile breast exams.
AMOREPACIFIC Welfare Foundation This institution was established in 1982 to organize projects that support low-
income women and their children. We repaired or replaced the old toilets and bathing facilities at 22 public welfare
institutions through the Happy Bath, Happy Smile program in 2009. The "Happy World We Create" community service
program for 2,250 5th and 6th graders was also run at 24 different primary schools nationwide.
AMOREPACIFIC Academic & Cultural Foundation This institution was established in 1973 as the AMOREPACIFIC
Scholarship Culture Foundation to further social development by nurturing gifted students and supporting important
research projects. The support is particularly focused on studies by women, and their work results continue to grow. As
such, the AMOREPACIFIC Academic and Cultural Foundation has become an important center for studies on women in
everyday life. The research findings are disseminated through books and films sponsored by the Foundation. In addition,
studies that would be difficult to capture under a single theme are supported through repeated research projects. An
academic exchange with Southeast Asia is also helping to transform the Foundation into a global HRD center.
Foundations for the Public Welfare
Appendix74
Summary of Consolidated
Financial Statements
75
Domestic and Overseas
Operations
76
Environmental Management
System
77
GRI Index
80
Assurance Report
74
Summary of Consolidated Financial Statements
AMOREPACIFIC Co,.Ltd
2009 2008
SalesGross profit Selling and Administrative expensesOperating incomeNon-operating incomeNon-operating expensesIncome before income taxesNet income
1,940,423 1,401,1521,091,951
309,202 25,02034,443
299,779 225,878
1,678,3441,179,992
933,612246,380
37,27931,106
252,553170,235
Consolidated Statements of Income
PACIFIC Corp.
2009 2008
2,219,0451,568,0321,257,936
310,09645,24438,872
316,468238,134
1,906,6761,316,0471,082,975
233,07269,09636,035
266,133186,356
AMOREPACIFIC Co,.Ltd
2009 2008
Current AssetsQuick assetsInventories
636,438476,343
160,095
527,119354,157172,962
Non-Current AssetsInvestmentsTangible assetsIntangible assetsOther non-current assets
1,117,679 77,559
939,650 27,312 73,156
1,010,97369,886
834,93523,50682,646
Total Assets 1,754,116 1,538,092
Current liabilities 284,944 256,613
Non-current liabilities 169,457 166,175
Total Liabilities 454,402 422,788
Capital stock 34,508 34,508
Capital surplus 712,702 712,727
Capital adjustments -1,810 -1,810
Accumulated other comprehensive income
24,418 31,319
Retained earnings 529,897 338,561
Minority interests in consolidated subsidiaries
- -
Total shareholders' equity 1,299,714 1,115,305
Consolidated Statements ofFinancial position
PACIFIC Corp.
2009 2008
1,093,266912,346180,920
977,754785,295192,459
1,890,381138,077
1,264,720433,807
53,777
1,761,189114,239
1,141,155456,160
49,635
2,983,647 2,738,943
332,766 296,264
283,219 265,971
615,985 562,235
44,451 44,451
850,790 851,428
-133,665 -135,304
13,483 13,717
621,501 552,391
971,101 850,025
2,367,662 2,176,708
Note: Consolidated Subsidiaries of PACIFIC Corp. and AMOREPACIFIC Corp.
PACIFIC Corp. AMOREPACIFIC Corporation
Etude Corporation
AMOS Professional Corp.
PACIFICPHARMA Corporation
PACIFICGLAS, Inc.
Jangwon Co., Ltd.
AMOREPACIFIC Europe S.A.S
AMOREPACIFIC Cosmetics (Shanghai) Co., Ltd.
AMOREPACIFIC Trading Co., Ltd.
KRW in millions
75
Domestic and Overseas Operations
Main Business Contents Location
Headquater Sales/Support 181 Hangangro-2-ga. Yongsan-gu, Seoul, Korea
Regional Offices BusanDaeguDaejeonGwangju
SalesSalesSalesSales
1164-9 Choyang-3-dong, Dong-gu, Busan, Korea300-12 Sincheon-4-dong, Dong-gu, Daegu, Korea1025 Dunsan-dong, Seo-gu, Daejeon, Korea 57 Geumnamro-2-ga, Dong-gu, Gwangju, Korea
Factory Skin CareMake-upMass Beauty Sulloc Tea
Manufacturing cosmetics Manufacturing cosmetics Manufacturing Household products Manufacturing teas
751-3 Yeongdeok-dong, Giheung-gu, Yongin-si, Gyeonggi1000-2 Daegwang-dong, Kimcheon-si, Gyongbuk, Korea 227 Daehwa-dong, Daedeok-gu, Daejeon, KoreaGwanghyewon-ri, Mansung-myeon, Jincheon-gun, Chungbuk, Korea
Domestic Operations
Region Name of Companies
France AMOREPACIFIC Europe S.A.S.
China AMOREPACIFIC Cosmetics (Shenyang) Co., Ltd.AMOREPACIFIC Cosmetics (Shanghai) Co., Ltd.AMOREPACIFIC Trading Co., Ltd.
USA AMOREPACIFIC Cosmetics (USA), Inc.
Japan AMOREPACIFIC Japan Co., Ltd.
Taiwan AMOREPACIFIC Taiwan Co., Ltd.
Singapore LANEIGE Singapore Pte., Ltd.
Malaysia LANEIGE Malaysia Sdn., Bhd.
Russia AMOREPACIFIC RUS Co., Ltd.
Hong Kong AMOREPACIFIC Hong Kong Co., Ltd.
Indonesia PT. LANEIGE Indonesia Pacific
Thailand AMOREPACIFIC (Thailand) Limited.
OverseasOperations
76
Environmental Management System
Organizational Unit Quality Management System
(ISO 9001)
Environment Management System
(ISO 14001)
Health and Safety Management System
(K-OHSMS 18001)
Quality Control Standards
Head OfficeR & D Center Skin Care Value Center Mass Beauty Value CenterMake-up Value Center Sulloc Tea Value CenterShanghai SubsidiaryLogistics Center
●(2003)●(2003)●(2003)●(1995)●(2003)●(2003)●(2008)●(2003)
●(1995)●(2000)●(2000)●(2000)
●(2009)
●(2002)●(2004)
CGMP(1993)
CGMP(2002)HACCP(2003)
EnvironmentalManagement System Certification Status
Environmental Policy and Environment-friendly Production Development Principle
Environmental PolicyThe mission of AMOREPACIFIC, the beauty and health specialists, is to enable customers to realize their dreams for a healthier, more beautiful life. Our operations address both environmental and economic concerns and protecting ecosystems. The innovative environmental value that we generate and our ongoing improvements are helping to raise the quality of life for all people.
1. We recognize that all corporate activities affect the environment. Accordingly, we have established an environmental management system and continue to improve our environmental performance, thereby creating environmental value.
2. We design our new products to be environmentally safe during use and after disposal, and we develop clean production technology to minimize any pollutants being released. As a result, the environment remains clean and fresh, and customers' expectations are met.
3. We adhere to environmental laws as well as to our internal regulations, which are stricter than what the law allows.4. We reinforce inside and outside communication system through the informatization of environmental management
activities. 5. We deeply understand our obligation to preserve the environment, and we participate in environmental protection
activities in local communities.
Environment-friendly Production Development Principle 1. Secure Safety Through securing the product safety, we reduce to impact of human body and the environment. 2. Reduction of Natural Resources We keep on reducing resource usage. 3. Improvement of Recycling We make an effort to circulate our natural recourses by recycling. 4. Reduction of Eco-Toxicity We preserve our life, eco system.5. Innovative Design We make innovative design to improve both of environment and economy.
77
G3 Indicators Page
Strategy and Analysis
1.1
1.2
Statement from the most senior decision-maker of the organization about the relevance of sustainability to the organization and its strategyDescription of key impacts, risks and opportunities
6, 7
12
OrganizationalProfile
2.12.22.3
2.42.5
2.62.72.82.92.10
Name of the organizationPrimary brands, products and / or servicesOperational structure of the organization, including main divisions, operating companies, subsidiaries and joint venturesLocation of organizations' headquartersNumber of countries where the organization operates and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the reportNature of ownership and legal formCharacteristics of Markets servedScale of the reporting organizationSignificant changes during the reporting period regarding size, structure or ownershipAwards received in the reporting period
522-2311, 74
7575
10, 7427, 28, 75
29, 5325
1, 40
Report Parameters
3.13.23.33.43.53.63.73.8
3.9
3.10
3.11
3.123.13
Reporting periodDate of most recent previous reportReporting cycleContact point for questions on reportProcess for defining report contentBoundaries of the reportState any specific limitations on the scope or boundary of the report.Basis for reporting on the entities that can significantly affect comparability from period to period and / or between organizationsData measurement techniques and the bases of calculations, including assumptions and techniques Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statementSignificant changes from previous reporting periods in the scope, boundary or measurement methods applied in the reportTable identifying the location of the Standard Disclosures in the reportPolicy and current practice with regard to seeking external assurance for the report
2222
1522
229, 43, 53
52, 55
-
77-7980-81
Governance, Commitments and Engagement
4.14.24.3
4.4
4.5
4.64.7
4.8
4.9
4.10
4.11
4.12
4.13
4.144.154.16
4.17
Governance structure of the organizationIndicate whether the Chair of the highest governance body is also an executive officerFor organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and / or non-executive membersMechanisms enabling shareholders and employees to provide recommendations or direction to the highest governance bodyLinkage between the company's performance and compensation for members of the highest governance body, senior managers and executivesProcesses for the highest governance body to prevent conflicts of interestProcess for determining the qualifications and expertise of the members of the highest governance body to guide the organization's strategy on economic, environmental, and social topicsInternally developed statements of mission or values, codes of conduct, and principles relevant toeconomic, environmental, and social performance and the status of their implementation.Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental and social performanceProcesses for evaluating the highest governance body's own performance, particularly with respect to economic, environmental and social performanceExplanation of whether and how the precautionary approach or principle is addressed by the organizationExternally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or endorsesMembership in associations(such as industry associations) and / or national / international advocacy organizationsList of stakeholder groups engaged by the organizationBasis for identification and selection of stakeholdersApproaches to stakeholder engagement, including frequency of engagement by type and by stakeholder groupKey topics and concerns that have been raised through stakeholder engagement and how the organization has responded to those key topics and concerns
10, 111010
10
-
1010
8, 76
10
10
16, 17, 76
34, 46, 68, 72
-
141414
14, 15
GRI Index
78
G3 Indicators Page UNGC
Economic : Disclosure on Management Approach 18
EconomicPerformance
EC1EC2
EC3EC4
Direct economic value generated and distributedFinancial implications and other risks and opportunities for the organization's activities due to climate changeCoverage of the organization's defined benefit plan obligationsSignificant financial assistance received from government
�
◐
◐
◐
21, 27, 2943
2929
-7
--
MarketPresence
EC5
EC7
Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operationProcedures for local hiring and proportion of senior management hired from the local community at locations of significant operation
◐
◐
Note1
53
1
6
IndirectEconomicImpacts
EC8
EC9
Development and impact of infrastructure investments and services provided primarily for public benefitUnderstanding and describing significant indirect economic impacts
�
�
29, 67
35, 59, 63-65
-
-
Environmental : Disclosure on Management Approach 42, 76
Energy EN3EN4EN5EN6
EN7
Direct energy consumption by primary energy sourceIndirect energy consumption by primary sourceEnergy saved due to conservation and efficiency improvementsInitiatives to provide energy-efficient or renewable energy based products and servicesInitiatives to reduce indirect energy consumption and reductions achieved
�
�
�
◐
�
4848
43, 4543, 44
43-45
88
8, 98, 9
8, 9
Water EN8 Total water withdrawal by source � 48 8
BIodiversity EN11
EN12
EN14
EN15
Location and size of land owned, leased, managed in protected areas and areas of high biodiversity value outside protected areasDescription of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areasStrategies, current actions and future plans for managing impacts on biodiversityNumber of national conversational list species with habitants in areas affected by operations, by level of extinction risk
◐
◐
◐
N/A
44
44
36
8
8
-
-
Emissions,Effluents,andWaste
EN16EN17EN18EN20EN21EN22
Total direct and indirect greenhouse gas emissions by weightOther relevant indirect greenhouse gas emissions by weight Initiatives to reduce greenhouse gas emissions and reductions achievedNOx, SOx, and other significant air emissions by type and weightTotal water discharge by quality and destinationTotal weight of waste by type and disposal method
�
�
�
�
�
�
4344, 4543, 45
494849
8-
7-9888
Products and Services EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation
� 33, 34, 44 7-9
Compliance EN28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations
� None 8
Transport EN29 Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce
� 45 8
Overall EN30 Total environmental protection expenditures and investments by type � 2,603 KRW million
7-9
Labor Practices and Decent Work : Disclosure on Management Approach 50
Employment LA1LA3
Total workforce by employment type, employment contract, and regionBenefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations
�
�
5357
--
Labor/ ManagementRelations
LA4LA5
Percentage of employees covered by collective bargaining agreementsMinimum notice period regarding operational changes
�
�
56Note2
1, 33
OccupationalHealth andSafety
LA6
LA7
LA8
LA9
Percentage of total workforce represented in formal joint management-worker health and safety committees Rates of injury, occupational diseases, lost days, and absenteeism, and number of work related fatalities by regionEducation, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseasesHealth and safety topics covered in formal agreements with trade unions
�
�
�
�
54
54
54
56
1
1
1
1
� Fully Reported ◐ Partly Reported � Not Material
Reporting Status
79
Human Rights : Disclosure on Management Approach 53
Investment and ProcurementPractices
HR3 Total hours of employee training on policies and procedures concerning aspects of human rights
◐ 16 1, 6
Non-Discrimination HR4 Total number of incidents of discrimination and actions taken � 53 1, 2, 6
Freedom of Association andCollective Bargaining
HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights
� 56 1-3
Child Labor HR6 Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor
� 53 1, 2, 5
Forced and Compulsory Labor
HR7 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor
� 53 1, 2, 4
Society : Disclosure on Management Approach 16
Community SO1 Effectiveness of any programs and practices that assess and manage the impacts of operations on communities
� 42, 66, 76 -
Corruption SO2
SO3
Percentage and total number of business units analyzed for risks related to corruptionPercentage of employees trained in organization's anti-corruption policies and procedure
◐
�
16,17
16
10
10
Public Policy SO5 Public policy positions and participation in public policy development and lobbying
◐ 16, 44, 46, 64 -
Compliance SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations
� None -
Product Responsibility : Disclosure on Management Approach 32
Customer Healthand Safety
PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement
� 36 -
Product andService Labeling
PR3
PR5
Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirementsPractices related to customer satisfaction
�
�
36
37-39
8
-
MarketingCommunication
PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion and sponsorship
� 16 -
Customer Privacy PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data
� 37 1
Note 1. Minimum wage laws are strictly followed.Note 2. Articles 13 and 19 of the Collective Agreement stipulates the minimum notice period.
G3 Indicators Page UNGC
TrainingandEducation
LA10LA11
LA12
Average hours of training per year per employee by employee categoryPrograms for skills management and lifelong learning and assist them in managing career endingsPercentage of employees receiving regular performance and career development reviews
�
◐
◐
5252
57
--
-
Diversityand EqualOpportunity
LA13
LA14
Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversityRatio of basic salary of men to women by employee category
�
�
10, 53
53
1, 6
1, 6
Reporting Status
80
Assurance Report
To the readers of the AMOREPACIFIC Sustainability Report 2009
IntroductionWe have been engaged by AMOREPACIFIC Co., Ltd. to review information in AMOREPACIFIC Sustainability Report 2009 (further referred to as The Report henceforce). The Executive Board of AMOREPACIFIC Co., Ltd. has the responsibility of creating for the Report. Our responsibility is to issue an assurance report in relation to the scope described below.
ScopeOur engagement activities were designed to provide the readers of The Report with reasonable and limited assurance in all material respects on specific information listed below:
• �Reasonable assurance on whether: the data on financial performance, as specified in the section 'Work undertaken and conclusions' are properly derived from the audited consolidated financial statements of AMOREPACIFIC.
• limited assurance on whether: - Specific indicators - CO2 Emission Volume, Energy Usage, Employees education time and cost, Social Contribution cost - are reliable.
-Specific information in the following sections of The Report is fairly stated: Financial Performance (p 20 - p 29) Our Customer (p 32 - p 41) Our Environment (p 42 - p 49) Our Community (p 66 - p 72)
'Fairly stated' means that The Report properly reflects the information contained in the underlying sources that it is consistent with the original source of information.
Reasonable assurance is a higher level of assurance than limited assurance, which is reflected in the nature and depth of the work performed. To obtain a thorough understanding of the financial results and financial position of AMOREPACIFIC, the reader should consult the audited consolidated financial statements of AMOREPACIFIC for the year ended 31 December 2009. Assurance on GHG Inventory was not a part of our engagement.
Standards / Reporting CriteriaWe conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE 3000): 'Assurance Engagements other than Audits or Reviews of Historical Financial Information', issued by the International Auditing and Assurance Standards Board. Amongst others this standard requires that:
• the assurance team members possess the specific knowledge, skills and professional competencies needed to understand and review the information in The Report, and that they comply with the requirements of the IFAC Code of Ethics for Professional Accountants to ensure their independence;
• when providing limited assurance, which is a lower level than reasonable assurance, a negative form of conclusion is used.
There are no generally accepted standards for reporting sustainability performance. AMOREPACIFIC applies its own internal sustainability performance reporting criteria, in addition to using the G3 Sustainability Reporting Guidelines of the Global Reporting Initiative.
Considerations and LimitationsEnvironmental, health, safety and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data. Our engagement activities were conducted based on limited processes, which means that additional assurance procedures could lead to a different conclusion.
81
Work Undertaken and ConclusionsFinancial DataWe have reconciled the data on financial performance for the year 2009 listed below, with the audited 2009 consolidated financial statements of AMOREFACIFIC.
• the financial performance information on page 21, 29
Based on the above, the data on financial performance specified above are properly derived from the 2009 consolidated financial statements of for which the independent auditors issued an unqualified audit opinion dated March 8, 2010.
Specific Indictors For the reliability of the indicators -CO2 Emission Volume, Energy Usage, Employees education time and cost, Social Contribution cost- we conducted:
• a review of the data reported by reporting organizations;• a review of the systems used to generate, aggregate and report these data;• a review of the data validation process at product division level;• a review of the calculation made at corporate level;
Based on the above, the indicators - CO2 Emission Volume, Energy Usage, Employees education time and cost, Social Contribution cost - do not appear to be unreliable.
Specific SectionsFor the information in the sections of The Report, as specified above under 'SCOPE' we conducted:
• a review of the systems and processes used to generate this information;• a review of internal documentation and intranet sources;• Interviews with staff in order to assess the information included in the specific sections• Visit to sites operating in Suwon, Daejeon, Busan
Following our review we discussed changes to the draft Report with AMOREPACIFIC and reviewed the final version of The Report to ensure that it reflected our findings. Based on the above, the information in the sections – 'Financial Performance', 'Our Customer', 'Our Environment', 'Our Community' - does not appear to be unfairly stated.
CommentaryWe believe that the following information, without affecting the conclusions presented above, may be useful to the reader's decision-making. AMOREPACIFIC has been making great efforts to promote sustainability tasks for realizing their vision and targets regarding sustainability management.
In order to further enhance its sustainability management practice, AMOREPACIFIC needs to set up sustainability performance measuring system based on improving the current system used for generating, aggregating, and reporting of key performance sustainability data relevant to the company. Specifically, we recommend that the company need to supplement internal system regarding quantification and reporting of CO2 emissions. Furthermore, we expect that AMOREPACIFIC try to disclose sustainability performances at oversees operations, which enhance the completeness of reporting the performances.
We have discussed our observations as well as reporting process beyond the scope of our contract with AMOREPACIFIC management and found them receptive to our comments.
Kim, Young Hyo | Lee, Geun Mo
Managing Partner Samjong KPMG Advisory Inc.
Seoul, March 31 2010
corp.amorepacific.co.kr
This Report is published with earth-friendly paper and soy-based ink. The cover paper was produced in Scotland from pulp
bleached in a chlorine-free process. The text paper has been certified by the Forest Stewardship Council, which means that it
comes solely from wood products obtained under responsible forest management practices. Soy ink is earth-friendlier than inks
from petroleum derivatives and low VOC (Volatile Organic Compound) levels, helping to reduce air pollution by minimizing toxic
emissions.
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